House Hearing, 106TH Congress - The Rudman Report: Science at Its Best, Security at Its Worst

THE RUDMAN REPORT: SCIENCE AT ITS BEST,
SECURITY AT ITS WORST
HEARING
BEFORE THE
COMMITTEE ON COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
JUNE 22, 1999
Serial No. 10657
Printed for the use of the Committee on Commerce
U.S. GOVERNMENT PRINTING OFFICE

58514CC WASHINGTON : 1999
VerDate 20-MAR-2000 13:03 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 E:\HEARINGS\58514.TXT pfrm02 PsN: 58514
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. BILLY TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN MCCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DEGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona LOIS CAPPS, California
CHARLES W. CHIP PICKERING,
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
JAMES E. DERDERIAN, Chief of Staff
JAMES D. BARNETTE, General Counsel
REID P.F. STUNTZ, Minority Staff Director and Chief Counsel
(II)
2
CONTENTS
Page
Testimony of:
Richardson, Hon. Bill, Secretary of Energy .................................................... 11
Rudman, Hon. Warren B., Chairman, Presidents Foreign Intelligence
Advisory Board .............................................................................................. 15
Material submitted for the record by:
Dingell, Hon. John D., a Representative in Congress from the State
of Michigan, letter dated June 25, 1999, to Hon. Warren B. Rudman,
requesting responses for the record ............................................................. 84
Richardson, Hon. Bill, Secretary of Energy, responses for the record ......... 78
Rudman, Hon. Warren B., Chairman, Presidents Foreign Intelligence
Advisory Board, letter dated June 30, 1999, enclosing response for
the record ....................................................................................................... 87
(III)
3
THE RUDMAN REPORT: SCIENCE AT ITS
BEST, SECURITY AT ITS WORST
TUESDAY, JUNE 22, 1999
HOUSE OF REPRESENTATIVES,
COMMITTEE ON COMMERCE,
Washington, DC.
The committee met, pursuant to notice, at 1 p.m., in room 2123
Rayburn House Office Building, Hon. Tom Bliley (chairman) pre-
siding.
Members present: Representatives Bliley, Oxley, Barton, Upton,
Stearns, Gillmor, Greenwood, Cox, Burr, Ganske, Rogan, Shimkus,
Bryant, Ehrlich, Dingell, Markey, Rush, Klink, Stupak, Sawyer,
Green, Barrett, and Luther.
Staff present: Tom DiLenge, majority counsel; Mark Paoletta,
majority counsel; Kevin Cook, professional staff member; Anthony
Habib, legislative clerk; and Edith Holleman, minority counsel.
Chairman BLILEY. The committee will come to order: I want to
thank the Secretary and I want to thank Senator Rudman for
being available today. I know they have been testifying this morn-
ing over in the Senate. I also know that Senator Rudman has a
schedule to meet and a plane to catch and we need to be respectful
of that.
As a result of that, I intend to make an opening statement and
turn to our colleague, Ron Klink from Pennsylvania, for an opening
statement and ask unanimous consent that all members may insert
opening statements in the record so that we can get the testimony
of the Secretary and the Senator Rudman and have as much time
for questioning as possible.
Without objection that will be the order. The Chair recognizes
himself for an opening statement.
Today, the full committee will hold this hearing on the report
issued last week by the Presidents Foreign Intelligence Advisory
Boarda report that speaks directly about the poor state of secu-
rity at the Department of Energys most sensitive nuclear weapons
laboratories. The chairman of the boardthe distinguished former
United States Senator from New Hampshire, Warren Rudman
will testify before us today, along with Energy Secretary Bill Rich-
ardson, to discuss those findings and the boards recommendations
for structural reform at the Department.
Unfortunately for the American people, the Rudman Report con-
firms that the Department of Energy as currently organized, sim-
ply cannot be trusted with the awesome responsibility of protecting
our Nations most prized nuclear secrets. As I stated this past April
at a subcommittee hearing on the topic, the Departments historical
(1)
2
pattern on security matters is all too clear: scandal or incident, fol-

lowed by announcements from well-meaning department heads of
sweeping reforms that are either never implemented by the bu-
reaucracy or soon abandoned once the public spotlight fades or pri-
orities change. Given this troubling pattern, I asked the General
Accounting Office last fall to begin a review of the Departments
implementation of security recommendations and to update its
work on the status of nuclear security.
The Rudman Report describes this historical pattern in detail.
Secretary Watkins, during the Bush administration, took aggres-
sive steps to improve the Departments poor record on security
establishing a high-profile counterintelligence office with FBI in-
volvement, instituting mandatory background checks on foreign
visitors, and creating independent security policy making and in-
spection units for the first time in the Departments history. I un-
derstand that Secretary Watkins personally took an active interest
in security matters, and that both he and his senior staff received
regular security briefings.
Yet, as the Rudman report found, just 2 years later, a new En-
ergy Secretary came in and killed most of these initiatives. Coun-
terintelligence was slashed and buried in the bureaucracy, back-
ground check waivers were granted to the labs foreign visitors pro-
grams, the frustrated FBI officials packed their bags and left in
disgust, and the Departments own security apparatus was shunted
aside. No more secretarial or senior management briefings by the
Departments independent security inspectorsthey couldnt get
time on the schedule. And numerous critical security reports and
warnings from internal and external critics went unheeded.
While the current Secretary is the first since Admiral Watkins
to pay attention to security matters, there are troubling indications
that he may be paying attention to the wrong people within the De-
partment. Ever since the latest security scandal broke several
months ago, Secretary Richardson has been busy reassuring Con-
gress and the American people that whatever had been broken is
now fixed. When our Oversight Subcommittee held a hearing in
April to put these claims of success in historical perspective and to
raise continuing security concerns, the Secretary attacked us for,
wallowing in old problems, and, exhuming the past.
When the Cox report on Chinese espionage was released in May,
Secretary Richardson dismissed its unanimous conclusion that se-
curity at the labs remained unsatisfactory, claiming that the re-
ports 6-month-old findings were now outdated in light of his re-
forms. And when the Rudman report took direct issue with the Sec-
retarys views on the current state of security, he accused the board
of lacking evidence and relying on malcontents for information.
The truth, Mr. Secretary, is that your repeated public claims that
our nuclear secrets are now safe and secure are simply not accu-
rate, and all the evidence you should have needed on that point
was right within your own Department. I fear that you are not
being well-served by your advisers, and that you are overlooking
important sources of information. I find it difficult to understand
that for someone who claims that security is his top priority, you
had never met withindeed you apparently did not even know
your Departments chief security inspector until 2 days before he
3
was scheduled to testify before our Oversight Subcommittee in

May. And when my staff requested a briefing last week on the De-
partments May 1999 security inspection of Lawrence Livermore
National Laboratorywhich I understand was not favorable in
many important respectsyour office blocked the briefing because
you had not had a chance to be fully briefed on the subject yet.
None of this bodes well for your reform efforts. As with all
things, the devil is in the details of implementation. The Rudman
Report makes clear that Congress cannot solely rely on the Sec-
retaryany Secretaryto make the type of lasting and effective
changes in security that this Nation deserves. That said, I think
the specific recommendations of the Presidents Advisory Board
need to be carefully considered to ensure that we dont trade in old
problems just to find ourselves with new ones.
I am particularly concerned with the boards apparent willing-
ness to subordinate security policy and, more importantly, security
oversight and inspections to what in essence would be a nuclear
weapons program office. My experience in this area tells me that
that would be a step backwards. I also have concerns about what
would become of the independent environmental, health, and safety
oversight that currently exists with respect to the Department of
Defense and lab programs. But I agree with the boards view that
the current management structure needs to be vastly simplified to
ensure the most aggressive oversight and the highest standards of
accountabilitytwo things that have been sorely lacking for as long
as the Department has been in existence.
I look forward to todays debate and future debates, on all of
these issues. I will now recognize the distinguished ranking mem-
ber of the Subcommittee on Oversight and Investigations, the gen-
tleman from Pennsylvania, Mr. Klink.
Mr. KLINK. Thank you very much, Mr. Chairman. To call this an
important hearing I think would be an incredible understatement.
I thank you for holding it and I thank you for yielding me this time
for an opening statement. As you, Mr. Chairman, know and Mr.
Dingell knows far better than I, this is an area in which this com-
mittee has a long and frustrating history of conducting oversight
and recommending changes to environment, health, safety and se-
curity at these facilities.
The Rudman report has spelled out in no uncertain terms the re-
fusal of the weapons laboratories, to this very day, to make a full
commitment to the security that equals the quality of their science.
Whether this has resulted in espionage at a level that is inferred
by the Cox report, we do not know. We do know that security needs
to be radically changed. But I remain extremely skeptical of the re-
ports recommendation to lift the nuclear weapons program and its
contractors out from under the control of any Cabinet-level officers
and plunge it down under another name and expect the culture to
miraculously change. Also this proposal makes no provision for the
safety, health, and environmental management responsibilities at
the labs, nor does it deal with the major security problem: the nu-
clear materials accountability for those materials now stored in
other sites.
And, Mr. Chairman, I also am skeptical of the congressional pro-
posals that would reward Defense Programs for its decades of arro-
4
gance by giving it a semiautonomous status in the Department of

Energy, with even less control by anyone, including the Secretary
of Energy, and no oversight structure of any type. This astounding
provision is in the House defense authorization bill and is expected
to be in the Senates intelligence bill. This is something labs have
wanted for at least 2 decades: a structure in which no one except
their captive Federal bureaucracy can tell them what to do.
One thing that we in this committee know better than almost
anyone else is that the culture of arrogance which pervades the
weapons laboratories is not just in the area of security but it is ev-
erything that the laboratories do. It is not only because of scientific
accomplishment but also because of political clout. In many ways
the laboratories, often with the help of the field offices, have con-
trol of the Office of Defense Programs, the Assistant Secretaries
who have headed it, and occasionally even the Secretary.
The Office of Defense Programs seems to view its job as getting
to labs what they want. And we need to take some responsibility
up here in Congress. The actions of the labs and the Defense Pro-
grams are often backed up by congressional members and delega-
tion s in the States in which they are located. For these reasons,
the labs have been able to thumb their noses at Congress and the
DOE headquarters. Security, industrial and radiation safety, and
responsibility for environmental management are viewed as major
hindrances to their primary missions.
Even now we must note that no one has been punished at either
the Defense Programs or the University of California which runs
Los Alamos, the lab on which the Chinese espionage investigation
has focused. As far as we can tell, the only adverse action taken
has been against the director of the Office of Standards and Secu-
rity for an alleged security infraction unrelated to the espionage in-
vestigation, an action that has yet to be appropriately explained.
The Office of Safeguards and Security is a policy office whose re-
ports over the years pointed out numerous security concerns that
angered the labs and Defense Programs. The unclassified version
of those reports were cited six times in the Rudman report.
Let me give you just a brief example in the safety area of how
the labs clout works. Just last week, staff was told that the Law-
rence Livermore National Laboratory in 1998 killed the Depart-
ments press release concerning a large fine assessed for safety
for radiation safety violations. Because Congress has exempted the
laboratories from actually paying the fines, the only real club that
DOE has is bad publicity. The press release was dutifully prepared
by a field office, was sent to the Secretarys office, and then dis-
appeared. We are trying to find out what happened, but the De-
partment is not being particularly forthcoming with staff of this in-
formation, and perhaps after this hearing we can get some assist-
ance in finding out what happened to that press release.
Let me give you another example of lab clout. For over a year
Mr. Dingell, Mr. Brown, the ranking member of the Science Com-
mittee, and myself and others have been investigating the largest
CRADA or Cooperative Research and Development Agreement ever
signed. It is between the Sandia, Lawrence Livermore, Lawrence
Berkeley labs and Intel Corporation, and it will continue to work
to develop a critical piece of equipment for the next generation of
5
computer chips. The labs got $250 million. The only problem was
that they and Intel want to manufacture all the equipment outside
the U.S. Even though the technology was developed here. This
meant that the lab researchers would have jobs but the high-pay-
ing skilled manufacturing jobs based on U.S. Technology would be
located another country. That position was developed by the labs
and the Oakland field office and was rubber-stamped by the De-
fense Programs. The headquarters staff hardly even knew the de-
tails of this enormous CRADA or that it violated our technology
transfers law. At one point they intended to negotiate an agree-
ment with a manufacturer in a single afternoon meeting. Only
after great effort were Mr. Dingell and Mr. Brown able to convince
DOE headquarters that American taxpayers had the right to get
some actual benefit from the investment that they had madeor
we think we convinced them.
DOE signed a very general agreement with a foreign manufac-
turing company that is supposed to guarantee manufacturing in
this country but so far has refused to produce a copy of the agree-
ment. From the little we know, it appears not to be binding and
we would like some help with the Energy Department to find out
about that.
Let me just say in full disclosure, Mr. Chairman, that the Sec-
retary of Energy served with us on this committee, he is a friend
of mine, someone I am sure is well-intentioned, and we will stipu-
late to that. But the question the Rudman report brings up time
and time again is, what happens if the people within the Depart-
ment of Energy dont listen to what the Secretary says, or even
what the President says, or even what the Congress says. And
what happens when Bill Richardson, our dear friend, the Secretary
of Energy, is not the Secretary of Energy anymore? How do we
know there is a continuation of policies which are to the best ben-
efit of our Nation and to the taxpayer?
For all of these reasons, I think that it would be a major error
to give more independence and power, with no meaningful over-
sight, to the Nations nuclear weapons laboratories.
With that Mr. Chairman I yield back my time.
Chairman BLILEY. I thank the gentleman.
[Additional statements submitted for the record follow:]
PREPARED STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF MICHIGAN
Thank you, Mr. Chairman, for holding this very important hearing today. I be-
lieve that the issues raised by the Rudman Report and the Departments long-stand-
ing inability to get its act together on security matters warrant the prompt attention
of the entire Committee, and I applaud you for convening us so quickly to address
this problem.
As the new chairman of the Oversight Subcommittee, I have been very troubled
by what Ive learned over the past few months about both the history of security
problems at the nuclear weapon labs and the current progressor apparent lack
thereofthat is being made in reforming this recalcitrant bureaucracy. Im amazed
by the Rudman Reports findings about continuing bureaucratic obstruction of Presi-
dential and Secretarial reforms at the laboratory level. Secretary Richardson has
boasted that he now runs the labs and they report to him, but the Rudman findings
make me wonder who really is in charge here.
I think it is also self-evident by now that the Department still has a long way
to go before it can claim confidently that sufficient reforms are in placeand, most
importantly, are working effectivelyto safeguard our nations nuclear secrets. Just
last month, the Cox Committee on Chinese espionage unanimously concluded that,
6
even if all of the announced reforms are fully implemented, we cannot realistically
expect that security will improve to a satisfactory level until next year at the ear-
liest. Given the Departments history and the problems experienced so far in insti-
tuting the latest round of reforms, the Cox Reports conclusion appears well-found-
ed.
The Secretarys repeated public comments to the contrary are baffling. Either he
is misleading the American publicwhich I dont believe he would intentionally
door he has less information available to him than the Cox Committee and the
Rudman panel had available to them, which itself is a major problem. Indeed, our
Committee staff has been receiving briefings from various Department employees
over the past several months that indicate continuing problems with security at the
labs and the implementation of the Administrations announced reforms. Appar-
ently, everyone except the Secretary knew of these continuing problems, forcing him
to repeatedly backtrack in public about this unfolding scandal.
The American people have a right not only to have their nations most sensitive
secrets fully protected, but also to get the most complete and accurate information
about the status of that protection. I think, so far, the Secretary and the Depart-
ment as a whole have failed in both respects. At the Subcommittee level, we plan
to keep the pressure on the Department to live up to both of these reasonable expec-
tations.
Thank you, Mr. Chairman.
PREPARED STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS
Thank you, Mr. Chairman. I am glad you decided to hold this as a full Committee
hearing, as this issue extends beyond just an Oversight and Investigations matter.
Any legislative effort to reorganize the Department of Energy will have to come
through the Commerce Committee, and it is essential that our Members understand
the magnitude of the problem we are facing.
Senator Rudman and his panel deserve a lot of credit for producing a candid and
hard-hitting analysis of the security problem at DOE facilities. When the Rudman
panel describes the Department of Energy as a dysfunctional structure character-
ized by organizational disarray, managerial neglect, and a culture of arrogance, it
hit the nail right on the head. During my four years as the previous chairman of
our Oversight and Investigations Subcommittee, and even dating back to my days
as a Presidential Management Intern assigned to DOE, I have seen abundant evi-
dence of the entrenched bureaucracy at DOE. Numerous Secretaries have tried to
make changes at the Department, only to be outwitted, or out-waited, by those re-
sistant to change.
While Senator Rudmans panel did an outstanding job of characterizing the prob-
lem, I am not sure yet whether the proposed solution is the right fix for the prob-
lem. I believe it is necessary to relocate the functions of the labs completely out of
DOE.
From a security perspective, a more serious problem arises from the fact that a
number of other DOE facilities not considered by the Rudman panel also engage in
weapons-related work. Examples include the Oak Ridge National Lab, the Pacific
Northwest Lab, and the Savannah River Site. Whatever solution we propose for the
security problems at DOE must address the entire DOE complex, not just the hand-
ful of labs and plants that are most strongly identified with weapons work. Here
is where the idea of a single security czar for the entire Department might be
more effective at policing the whole organization than the more limited fix rec-
ommended in the Rudman report.
There is one other area where I believe the Rudman panel may have missed the
mark. All of my experience with DOE, both within the organization and here in
Congress, tells me that the fundamental problem in the DOE organization is the
dominant role that its contractors play. One cannot change the culture in DOE with-
out addressing the role of these contractors. I believe that action should be taken
where there is evidence of problems with the contractors.
Any meaningful change in the DOE organization must start with the government
personnel, but must follow through with how the DOE contractors execute the direc-
tion provided by the government. Certainly the government is responsible for defin-
ing the scope of work to be performed, negotiating a fair contract price, and then
exercising sufficient contract oversight to ensure the work is performed. But the
contractor is not off the hook in this equation. Two of the most problematic labs
Lawrence Livermore and Los Alamosare run by the University of California. This
contractor shares a large part of the responsibility for this problem. It may be ex-
7
pecting too much to ask an academic institution, whose philosophy is built around
the free and open exchange of information, to operate effectively in the national se-
curity arena. I support terminating the University of Californias contract because
of their gross negligence in managing the Los Alamos lab where Chinese espionage
on our nuclear weapons designs occurred.
And that is where Secretary Richardson comes in. Mr. Secretary, you have a re-
sponsibility to set the right security standards for your organization. When those
standards are not met, as clearly they were not in the Los Alamos case, you have
a responsibility to hold the appropriate government officials and contractor per-
sonnel accountable. I am not talking about just the Wen Ho Lee incident, but rather
about the mounting evidence that something is seriously wrong in the management
of these labs and in the security operation throughout your organization. You should
be thinking about replacing not just the responsible DOE personnel at the field level
and headquarters, but also the responsible lab directors and contractors.
Lastly, I think the Rudman report has it right regarding the limited ability of any
one Secretary of Energy to change the system at DOE. No matter how well-inten-
tioned Secretary Richardson may be about reforming the Department of Energy and
correcting the security problems, there is no guarantee that subsequent Secretaries
will bring the same priority to the job. And there is no guarantee that the existing
bureaucracy of government personnel and contractor employees will implement your
reforms, when they have resisted so many other reforms in the past. That is why
this Committee must consider seriously the proposal to make a statutory change to
the organization at DOE.
Mr. Secretary, you have promised this Congress and the American public that the
problems that surfaced at Los Alamos are under control and cannot happen again.
The Rudman report says otherwisethat major security problems still persist in
DOE. I hope we can all get past the natural instinct to defend the status quo and
protect existing turfwe have to work together to do whats best for the country.
This issue is too important to do anything less. Thank you, Mr. Chairman.
PREPARED STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF FLORIDA
Mr. Speaker: After reviewing the Report of the Presidents Foreign Intelligence
Advisory Board regarding the poor security at the Department of Energy Nuclear
Weapons Laboratories and proposals for reform, I have come to the conclusion that
I agree with Secretary Richardsons opposition to the recommendations of the Advi-
sory Board to create a semi-autonomous agency or a separate independent agency
and I agree with Secretary Richardsons opposition to a wholesale reorganization of
the Department of Energy.
The only way to effectively deal with the repeated and critically damaging secu-
rity lapses is through the abolishment of the Department of Energy.
I read with horror the Rudman Report and its notation that:
Never have the members of the Special Investigative Panel witnessed a bu-
reaucratic culture so thoroughly saturated with cynicism and disregard for au-
thority. Never before has this panel found such a cavalier attitude toward one
of the most serious responsibilities in the federal governmentcontrol of the de-
sign information relating to nuclear weapons . . . Never before has the panel
found an agency with the bureaucratic insolence to dispute, delay, and resist
implementation of a Presidential directive on security, as DOEs bureaucracy
tried to do to the Presidential Decision Directive No. 61 (issued) in February
1998.
The Presidential Decision Directive (PDD) mandated new counterintelligence
measures at the labs, but the Advisory Board found that implementation of PDD
61 suffered from bureaucratic foot-dragging and even recalcitrance by DOE and
lab officials.
The report further notes that, DOE and the weapons laboratories have a deeply
rooted culture of low regard for and, at times, hostility to security issues, which has
continually frustrated the efforts of its internal and external critics.
I personally do not believe that a reorganization or a shake-up of the Department
of Energy and how it handles nuclear secrets will be sufficient in destroying the per-
vasive anti-establishment culture that exists in the Department and at the weapons
labs, as detailed by the Rudman Report.
A cancer exists at DOE and the only way to rid the disease that is infecting our
national security is through its removal of the Departments control of our nations
nuclear weapons. I believe the Department of Defense is much more capable of insti-
8
tuting the necessary security measures that will bring discipline to weapons man-
agement.
The non-military civilian functions of DOE and the weapons labs could easily be
rolled into a semi-autonomous agency within the Department of Commerce, such as
NTIA.
I admire my former colleague and still good friend, Secretary Richardson, for his
diligent work of trying to correct the serious problems at DOE. But, the Rudman
Report clearly details the uncorrectable culture that exists and has existed at DOE.
Secretary Richardson, unfortunately, believes that the security problems that has
led to overt espionage being committed against our nation has been fixed. The Rud-
man Report found new evidence of continuing problems despite the recent Presi-
dential and Secretarial reforms, including poor control of restricted and classified
data, inadequate monitoring of outgoing e-mails, and unsecure storage of nuclear
weapons parts, to name a few of the ongoing problems.
The Rudman Report concluded that DOE is incapable of reforming itselfbu-
reaucratically and culturallyin a lasting way, even under an activist Secretary.
I want to compliment and thank Senator Rudman and the Advisory Board for
their comprehensive work.
They accomplished in 90 days what National Security Advisor Sandy Berger could
not and did not even try to accomplish in three years. In fact, Notra Trulock, the
former Chief of Intelligence for DOE and one of Secretary Richardsons intelligence
advisors, has stated that he informed Mr. Berger in April of 1996 about the dilapi-
dated security conditions at DOE.
But Mr. Berger did less than nothing. He even waited over a year before notifying
the President of the serious security problems. For nearly three years after Berger
was notified and before Secretary Richardson came on board and before the Advi-
sory Board was formed, nothing was done to correct these devastating problems at
DOE.
And now Secretary Richardson says lower-level employees will be fired, even
though the National Security Advisor and other political appointees deserve imme-
diate removal.
The Department of Energy is a bureaucratic wasteland deserving of extermi-
nation.
Thank you Mr. Chairman.
PREPARED STATEMENT OF HON. GREG GANSKE, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF IOWA
A safe and secure Department of Energy, with its oversight over the most ad-
vanced computer and weapons technology in the world, is necessary for our national
security. However, the General Accounting Office has been reporting security defi-
ciencies at DOE laboratories for two decades.
The Report of the Presidents Foreign Intelligence Advisory Board is important be-
cause it alleges that the Department has been indifferent to security, institutional
authority, and personal accountability.
GAO told us two months ago that the two main causes of DOE security problems
were a long-standing lack of attention and/or priority given to security matters by
DOE managers and its contractors and there is a serious lack of accountability
among DOE and its contractors for their actions.
The Report before us today goes even further . . . Accountability at DOE has been
spread so thinly and erratically that it is now almost impossible to find and Never
before has this panel found such a cavalier attitude toward one of the most serious
responsibilities of the federal governmentcontrol of the design information relating
to nuclear weapons.
Even more troubling is the reported attitude that DOE employees approach their
security responsibilities with cynicism and disregard for authority and that DOE
is still unconvinced of Presidential authority.
In light of the Rudman Reports analysis, I think it is valuable to repeat some
of GAOs findings:
DOE Order 1240.2b requires that background checks be done for all foreign visi-
tors from sensitive countries. In September 1997, GAO reported that at two of our
nuclear laboratories, due to a special exemption to help those facilities cope with the
high volume of foreign visitors, background checks were conducted on only 5 percent
of visitors from sensitive countries. As a result of this failure to follow procedure,
GAO was able to document 13 individual cases in which persons with suspected for-
eign intelligence connections were allowed access to DOE laboratories without back-
ground checks.
9
Other reports detail foreign visitors allowed to roam secure areas after hours
without supervision, a lab losing 10,000 classified documents, and a DOE security
clearance database that was so outdated that 4,600 clearances should have been ter-
minated.
The Rudman Report asserts that we may now be physically secure against armed
infiltration. Even if this assessment is accurate, we currently face an even more
dangerous and harder to control threatelectronic espionage. Computer hackers are
very adept at circumventing firewalls and other protective devices. I would expect
that we could construct a secure system.
The Rudman Report recommends changes to the Departments structure. Some-
thing needs to be done to change not only the regulations of the Department, but
also the institutional culture within which DOE employees perform their duties. I
agree with the security changes recommended by the Presidents Foreign Intel-
ligence Advisory Board. DOE remains accountable not only to the President, but
also to this Congress and the American people.
I would like to thank both Secretary Richardson and Senator Rudman for appear-
ing here today. I look forward to your testimony and hope that you can help reas-
sure this Committee that DOE is taking the necessary steps to ensure our national
security.
PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF MICHIGAN
Mr. Chairman, thank you for holding this hearing today. No Congressional com-
mittee has spent more time and effort on oversight of the Department of Energys
security efforts. During my tenure as Chairman of the Subcommittee on Oversight
and Investigations, we conducted dozens of hearings over a decade. We looked at
numerous security lapses, such as the inability to account for nuclear material, the
lack of security at our weapons facilities, theft of property, and problems in the se-
curity clearance process, the handling of classified information, and the foreign visi-
tors program. Now the rest of the country knows why we were concerned.
I have reviewed the report by Senator Rudman and the Presidents Foreign Intel-
ligence Advisory Board, and I want to commend the Senator for an excellent report.
It documents security lapses over the past several decades in a clear and com-
prehensive fashion. It is a wakeup call to the country that these problems are ex-
tremely serious and in need of correction.
Reports alone will not suffice. Nor will good intentions. I note with interest that
on Sunday, Senator Rudman stated that bureaucrats at the Department of Energy
are still balking at implementing a Presidential order on security. He said, The at-
titude of people within that department, in that bureaucracy, is astounding.
To that I say, Amen.
The question before us is what to do next. In his report, Senator Rudman gave
good marks to recent actions by Secretary Richardson. He stated that more reforms
are necessary. More importantly, he noted that even if the Secretary made all of
the appropriate reforms, we need a statutory restructuring, because a future Sec-
retary could undo the reforms.
Indeed, we have already seen reforms adopted by one Administration, such as an
independent Office of Safeguards and Security Assessments, undone by the next Ad-
ministration.
Yet Chairman Bliley and I share concerns about current legislative efforts to es-
tablish an autonomous or semi-autonomous agency in charge of nuclear weapons for
precisely the reasons described by the Senator. We are concerned that those same
bureaucrats and lab contractors, who are refusing to accept the Presidents security
order, would be the ones running this agency, with even less oversight than is cur-
rently in place.
None of us wants to use these serious security problems as an excuse to put the
inmates in charge of the asylum.
This concern is not hypothetical. It is real. In every investigation concerning prob-
lems at the DOE weapons facilities and labs, the individuals responsible for the op-
eration of defense programs and their contractors consistently and repeatedly denied
the problems, punished the whistleblowers, and covered up the problems to their su-
periors and Congress.
Unfortunately, two provisions that are currently before Congressone in the
House-passed Defense Authorization, and the other a pending amendment to the In-
telligence Authorization in the Senatewould give these recalcitrant bureaucrats
and contractors total control over these programs. I strongly oppose these provi-
10
sions. I was joined in my opposition to the House provision by Chairmen Bliley and
Sensenbrenner, but we were not permitted to offer an amendment to strike it.
I want to turn attention to an even greater problem. Senator Rudmans Panels
report is entitled, A Report on Security Problems at the U.S. Department of En-
ergy. As a report on security problems, it is excellent. But in crafting legislative
solutions to security problems, we must not create other problems. I refer specifi-
cally to safety, health, and the environment.
Throughout the report, I found no references to the safety and environmental
problems at the DOE facilities, and I understand why: that was not the panels
mandate. However, some of the legislative proposals would certainly affect those ac-
tivities.
I am taken aback by those who say, in effect, that we need to return to the days
of the Atomic Energy Commission.
Do they want to return to the days when the operators of the Hanford facility put
thousands of gallons of highly radioactive waste in steel drums and buried them in
the ground, and then for years tried to hide the environmental damage that is now
costing the country billions of dollars a year to clean up their mess?
Do they want to return to the days when safety was so bad at our weapons facili-
ties that every plant had to be closed down, and we still do not have the capacity
to produce tritium for our weapons?
Do they want to return to the days when radiation experiments were conducted
on human guinea pigs, and then were covered up for decades?
The answer, of course, is no. I am pleased that the Rudman panel report ap-
pears to recognize the need for independent oversight for security and counterintel-
ligence. I note that the recommendations also expect the independent oversight
board to monitor performance and compliance to agency policies. In my view,
health, safety and the environment must also be subject to oversight that is inde-
pendent of national security officials.
Mr. Chairman, I am sure that we will find that in the end, we are much more
in agreement than disagreement. We all support the need to streamline the organi-
zational structure and enhance accountability of agency officials. We all agree that
independent oversight of sensitive areas, such as security, health, safety, and envi-
ronment is required. We all agree that current proposals need to be significantly
amended so that we do not repeat the problems of the past. We have in the past
worked in a bipartisan manner to bring about reforms, such as the Cox-Dicks
amendment to the Defense Authorization and the establishment of a Defense Facili-
ties Safety Board. That same effort is required nownot in a hasty and haphazard
manner on the Defense or Intelligence Authorization billsbut in carefully crafted
bipartisan legislation.
PREPARED STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MASSACHUSETTS
The Rudman report justly accuses the Department of Energys Defense Programs
of a culture of arrogance, of organizational disarray, of being a dysfunctional bu-
reaucracy. The report then proposes to isolate this dysfunctional culture into a sep-
arate government agency that will be even less subject to outside oversight. It does
not address how to change the culture at the nuclear weapons labs or at the con-
tractors who run them.
The report traces many of the problems back more than 25 years. At that time,
the weapons labs were under the Atomic Energy Commission, an independent agen-
cy. Because of the problems due to lack of oversight, the Commission was dis-
banded, with the labs transferred to the Energy Research and Development Admin-
istration, which later became part of the Department of Energy. Twelve years later,
when the extent of environmental destruction hidden behind the walls of secrecy be-
came widely known, the environmental cleanup and restoration functions were split
off from the Defense Programs and an environmental czar was appointed. Ten years
after that, when security problems became well-publicized, a security czar was ap-
pointed. Throughout this time, the same contractor, the University of California, has
actually managed Los Alamos as well as Lawrence Livermore Labs.
Now we are being urged to reorganize the Department of Energy, to put defense
programs back into a separate agency, to reanimate the corpse of the old Atomic
Energy Commission. I fear this will take us back to the bad old days, when an agen-
cy focused on making bombs, hidden from public sight, caused environmental havoc
and public health catastrophes. And once again the contractors who actually run the
weapon labs go virtually unmentioned. Rearranging deck chairs on the Titanic will
11
not plug the hole the security iceberg at Los Alamos has opened up. There is a gap-
ing security hole in our weapons laboratories, but rearranging government offices
will not close it.
PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS
Mr. Chairman, I would like to start by thanking you for holding this important
hearing. The findings in this report deserve the close scrutiny that only this com-
mittee can provide.
I would also like to thank our witnesses, Senator Rudman, and especially our
former colleague and good friend, Secretary Richardson, for appearing before the
Committee today.
It was clear to me, even before this report came out, that there were serious prob-
lems with security at these DOE laboratories. Since the early 1970s, this committee
has held extensive hearings on this subject, closely following the efforts of the DOE
to institute reforms.
Hopefully, this report, and the recommendations that it contains, will open a new
chapter in our oversight of this problem. We need to move forward on solutions that
will ensure the safety and security of both the information and technology that
these labs produce and the personnel who work in these labs.
However, I have my concerns about some of those recommendations. For instance,
if a new, semiautonomous agency is created within DOE, or if we move the responsi-
bility for these labs outside of DOE, what will happen to the many other tasks and
functions that these labs serve that are not weapons-related?
Also, it seems to me that part of the problem is the culture that has grown inside
these labs over the years. If we streamline the chain of command or create a new
agency, what will prevent that culture, that has contributed to the problem, from
becoming established in this new entity?
Furthermore, these weapons labs are currently self-regulating on things like radi-
ation exposure, safety and environmental issues. Since these are the types of issues
that have been problems in the past, will we continue to allow the labs to police
themselves?
Finally, we all know that these labs, for many years, ignored environmental con-
cerns and focused simply on producing weapons. Who will be responsible for the en-
vironmental cleanup at these sites, especially if they are removed from DOE juris-
diction?
These are just a few of the questions that I hope we have the opportunity to hear
the answers to today, Mr. Chairman. I look forward to hearing the responses from
both Senator Rudman and Secretary Richardson.
Chairman BLILEY. Mr. Secretary.
STATEMENT OF HON. BILL RICHARDSON, SECRETARY OF

ENERGY
Mr. RICHARDSON. Mr. Chairman, members of the committee,
thank you for the opportunity to discuss how to improve security
and counterintelligence at the Department of Energy. I want to
thank the committee for its flexibility which allowed me to testify
before the Senate this morning. I truly mean that, because I know
how busy members of this committee are.
No mission is more important to me than taking the actions nec-
essary to ensure that Americas nuclear secrets are well guarded.
We have made considerable progress, but I wont admit perfection,
as some of my colleagues have indicated. I am looking forward to
working with this committee, the Congress, and Senator Rudman
on ways to make things better.
Let me deal with Senator Rudmans report. This is a very impor-
tant report. It is hard-hitting, it identifies the root causes of the
long-standing security and counterintelligence problems at the De-
partment of Energy: confusing organizational structure, lack of ac-
12
countability, unclear roles and responsibilities, a lack of attention

to security.
I want to thank the chairman, Chairman Rudman, and this
panel for recognizing the aggressive steps we have already taken
to address serious and systemic security problems at the Depart-
ments labs and for making additional recommendations that can
help address the critical nature of the problems.
Chairman Rudman identifies a list of attributes that must char-
acterize meaningful reform. I agree virtually with all of them, such
as the needs of leadership, clarity of mission, and streamlined field
operations. The Presidential decision directive and the reforms I
have undertaken are based on some of the same basic principles
about what is needed to address the underlying problems. After
several months of wrestling with the problems at the Department,
I think it is essential that any reform of the departmental organi-
zation ensure that certain criteria are met.
First we must ensure that there is a clear chain of command and
accountability for implementing national security policy. I have al-
ready undertaken a major reorganization of the headquarters-to-
field relationship which clarifies reporting lines and responsibilities
across the complex. In my plan, the chain of command is clear, and
accountability is established for the nuclear weapons program. The
three weapons labs, and all of our nuclear weapons sites and facili-
ties throughout the complex report to the Assistant Secretary for
Defense Programs.
On those charts, Mr. Chairman and members of the committee,
are the reorganizations of the Department of Energy. The left chart
is the way that I have organized the Department. The chart on the
right is the confusing maze that I think has caused us these prob-
lems because of lack of attention given to security.
Second, the second principle, we must raise and not lower the
profile on authority of the nuclear weapons program to overcome
the systemic and long-lived security problems identified by both the
Cox and advisory board reports. From my experience, the Depart-
ment needs more engagement from the Secretary of Energy and his
or her office in the nuclear weapons program. I am concerned that
fencing off the Nations nuclear weapons program would blur the
Cabinet Secretarys role.
Third, we must ensure that security and counterintelligence pro-
grams have a senior departmental advocate with no conflicts of in-
terest. The only way to assure this is to have a separation between
the office responsible for the nuclear weapons program and the of-
fice responsible for establishing and monitoring security and coun-
terintelligence policies. That is the only way that you can assure
that security decisions arent shortchanged and that they are not
competing for the time and attention of senior management as well
as budgetary resources.
And fourth, we must ensure that stockpile stewardship doesnt
lose its link to cutting-edge science. Our ability to ensure the safety
and reliability of the nuclear deterrent depends upon cutting-edge
science. An autonomous agency would partition the laboratory sys-
tem and ultimately undermine the science on which our national
security depends.
13
A bureaucratic Berlin Wall between the weapons labs and the

science labs would hamper the joint research that they perform and
weaken the quality of basic science at the weapons labs. The nu-
clear weapons program depends on unclassified cutting-edge
science, requires active engagement in the other national labs, and
contact with the international community. It needs overall sci-
entific excellence to recruit and retain the best and brightest sci-
entific minds for the weapons program.
Let me just go through some reforms that we have taken. When
I went through all the recommendations that Senator Rudman and
his commission proposed, 43 in number, I found that my security
plan embraces 38 of them. That is almost 90 percent. That is a lot
of common ground in which we can work.
Let me quickly run through some of the reforms that we have al-
ready put in place. In counterintelligence, in February 1998, Presi-
dents Clinton ordered that the Department of Energy improve its
security dramatically and implement an innovative, comprehensive
counterintelligence and cybersecurity plan. By November of last
year, I approved the far-reaching aggressive new plan, improving
background checks on visitors, document controls, use of poly
graphs, and increases in our counterintelligence budget which has
grown by a factor of 15 since 1996.
In March we took additional steps for counterintelligence up-
grades, security training, and threat awareness and focused an ad-
ditional $8 million on further security, classified and unclassified
computer network. When I was informed of the serious computer
transfer issue at Los Alamos, I ordered a complete stand-down of
the classified computer systems at our three weapons labsLos Al-
amos, Livermore, and Sandiato accelerate computer security
measures already underway. The systems went back on line only
when I was convinced significant progress had been made. As of
today we have implemented 85 percent of the key recommendations
in our counterintelligence action plan.
We deal with security. I know that this has been an issue of
great interest to this committee, particularly Chairman Dingell,
former Chairman Dingell. I came to the Department of Energy
after having served 14 years on this committee, where I came to
understand the magnitude of the security management problems
facing the Department. And key members of this committee have
held a few hearings on this subject. Important hearings.
One of the first steps I undertook was to figure out how to untan-
gle the maze of illogical reporting relationships between the labs,
the field offices, and headquarters, to clarify chain of command and
establish accountability. That reorganization was completed April
21 and you can see it on the left.
Then on May 11 I took the next step needed to bring about ac-
countability and put some teeth into the security operation, with
the farthest-reaching security reorganization in the Department of
Energys history. We established the new high-level Office of Secu-
rity and Emergency Operation; the security czar, gathering all de-
partmental security function s in one place and answering directly
to me.
Last Thursday, retired four-star General Gene Habiger accepted
the position as the Departments security czar. General Habiger
14
brings to this job his experience as the Commander in Chief of

Strategic Command, where he was in charge of nuclear forces. He
is only 1 of 9 CINCs, and there is probably nobody better to deal
with nuclear weapons than General Habiger, who is here with me,
and who has come out of retirement to take this position.
As the security czar, the general will rebuild the entire Depart-
ments security, cybersecurity, and counterterrorism apparatus, as
well as our emergency response operations. He will be the single
focal point for security policy in ensuring that security is rigorously
implemented across the Department complex. We all know that
any organizational structure is only as its good as its people. We
should all thank him for coming out of retirement to serve his
country once more.
These are some of the measures we have already undertaken. I
believe that these changes embody the attributes that the Rudman
Commission identifies as critical to meaningful reform, and have
already had a dramatic impact on the security of the labs.
But, clearly, more needs to be done. I am looking carefully at the
recommendations in the Cox report and in this report of Senator
Rudman. I have been meeting with Senators and Members of the
House on ways to sort out what additional steps are needed and
which of these changes are measures we should codify to ensure
that the changes are institutionalized and last beyond the tenure
of any one Secretary of Energy or committee chairman.
There is much common ground. I think we can work that com-
mon ground to build on what has already been accomplished and
make even more sweeping Department reforms than the advisory
board recommends. But I do have concerns, I do have concerns
about the creation of an autonomous or semi-autonomous entity,
especially if we are trying to solve the security and counterintel-
ligence problems at the Department.
Security and counterintelligence problems cut across all of the
Departments missions and are not limited to the weapons labs and
productionsites. If anything, I think this has been the greatest con-
tribution of this committee, to point out some of the problems that
are in the entire complex, in the plutonium areas, at Rocky Flats,
in other parts where the guns, bombs, some of the other parts of
the Department have not been up to speed.
Chairman BLILEY. Mr. Secretary, could you
Mr. RICHARDSON. Mr. Chairman, this is pretty important. I
would appreciate the chance to be heard. We need to improve secu-
rity at all sites, and fencing off the weapons complex is not the an-
swer. Plutonium located at our environmental management sites
demands the same level of security as plutonium at Los Alamos.
Mr. Chairman, since I am the person that inconvenienced the
committee, I will now wrap up. Let me just say that this Commerce
Committee is one of the most active oversight committees in the
Congress. And the last point I am going to make is that I think
it is very important that there be independent oversight of my De-
partment by an independent oversight agency reporting directly to
me.
This is something that was part of the Dingell Commission re-
forms that were adopted, but then previous Secretaries took out
this office, put it in Germantown, Maryland, and I have brought
15
this back because I think it is important to have this independent

oversight.
I believe that with the Rudman recommendations, with the Cox
recommendations, we can make a lot of progress. I am trying to fix
a problem. I have been in the job 8 months. We are not perfect but
we have made dramatic reforms. I need the support of this com-
mittee to ensure that we have those reforms in place.
Chairman BLILEY. Thank you, Mr. Secretary.
Senator Rudman.
STATEMENT OF HON. WARREN B. RUDMAN, CHAIRMAN,
PRESIDENTS FOREIGN INTELLIGENCE ADVISORY BOARD
Mr. RUDMAN. Mr. Chairman, Mr. Dingell, first let me inquire of
Mr. Chairman how long is that set for in opening statements, and
I will try to stay within that time.
Chairman BLILEY. Well, since Mr. Secretary took about 10 min-
utes, you plan on taking that amount, too.
Mr. RUDMAN. All right. Let me try to do that. I will assume that
members have at least read part of the report, if not all of it.
First let me tell you it is an honor to appear here. It has been
a long time since I have been up here again. It is nice to see so
many familiar faces. There is rarely enough time to discuss a re-
port such as this in detail, so I will try to highlight what we did.
Our objective was to write a report that would stick, that would
make a substantial difference, would help the President and the
Congress and the Secretary effectuate reform, and that is essen-
tially what we have produced. Let me point out to this committee
that has had a long record of oversight over this agency, that we
were not asked to look at management generally, we were not
asked to look at other issues. Our charge at the present was quite
narrow and direct: Look at security at these agencies, historically,
present, future; make a recommendation; back it up with facts.
That is what we have done. I cannot comment on other parts of
this Department because we did not study them. And I must tell
you I have never served on a committee in the Congress that had
oversight directly over the Department of Energy, for which I ex-
press some degree of luck.
I had our staff sit down and add up the number of reports that
have found problems with security at DOE for the past 20 years.
There are 29 reports from GAO and 61 from inside DOE; more
than a dozen reports from special task forces and various ad hoc
panels. We wanted to cut through the fog of the bureaucratic jar-
gon and somewhat wishy-washy language of some of those reports,
so we have written a fairly direct and blunt report.
I want to advise the committee that I did not do this alone. I had
people familiar to this panel, certainly one of the preeminent nu-
clear physicists of this country, Sid Drell, who I am sure has ap-
peared over here, who knows these laboratories better than anyone
I have ever spoken to; Ann Caracristi, former number 2 at NSA,
long-time government employee; Stephen Friedman, who, since his
retirement from business, has done a lot of intelligence assign-
ments for several administrations. So this is a group effort. And I
have had a great staff, much of it loaned by agencies, some PFIAB
staff.
16
There is an old saying among farmers from New Hampshire, and

probably Chairman Bliley would say it is Virginia, but we have all
heard it, and the saying is, you know, if it aint broke, dont fix it.
Well, I have a corollary, and my corollary is if it is broken so badly
as this is, dont even try to fix it, do something to kind of replace
it. And that is about where we come out.
It comes down to this: This is really not about security. That is
what we finally decided. This is about what, frankly, former Chair-
man Dingell talked about in a series of reports written by him
when he was chairman. This is about accountability. This is about
a chain of command that works. And counterintelligence, security
are merely symptoms of a problem of accountability.
Let me say a word about the root causes. These laboratories are
not only, in our opinion, the crown jewels of the United States sci-
entific establishment, they are the crown jewels of the worlds sci-
entific establishment. Nothing we say in this report should be con-
strued as criticism of the extraordinary contribution these labora-
tories have made to this Nations security. In fact, we chose the
title with some care, Science at Its Best, Security at Its Worst.
And we dont have any comments about the work they do. We
have a lot of comments about improving their security.
We found evidence and heard testimony that was appalling, and
I use that word deliberately. Now, you hold a lot of hearings here,
and I held a lot of hearings over in my career at the Senate. It is
fascinating what you can do in a closed hearing which you dont
have the luxury to do that. It is as fascinating to invite people in
who are not on the record, who are not subject to retribution by
their agency, and have them tell you frankly what is going on. And
what we heard was astounding. We can back up every allegation
in this report with solid, uncontrovertible, confirmed fact.
We found six areas, security and counterintelligence and man-
agement, and planning, physical security, personnel security, infor-
mation security, nuclear materials accounting, and foreign visitors.
The striking thing about this isand this is known to this com-
mittee better than to us; I mean, after all, you have been doing this
for yearsthere have been report and report after report that has
come to the Congress, and I expect people have tried to do things.
I dont quite understand why this bureaucracy seems to be able to
defend itself against almost anything. I brought a few along for
those of you that are lawyers. We often talk about the weight of
the evidence; well, this is pretty heavy. There are a hundred of
them. I brought six, just to remind you of some of the work that
has been done mainly by DOE at your request and by the Senate
committees request, but more by this committee: 1986, DOE man-
agement of safeguards and security needs to be improved; 1988,
GAO, major weaknesses in foreign visitor program at nuclear labs;
1993, done by DOE, lack of accountability for implementing secu-
rity requirements; 1996, Defense Nuclear Facilities Safety Board,
impediments to resolving problems as a result of lack of under-
standing, experience and personal involvement by upper echelons
of DOE management; 1997, DOE Office of Security Affairs, frag-
mented and dysfunctional security management in place at DOE;
1999, DOEs bureaucratic complexity is so great that it can conceal
otherwise obvious and easily detected flaws. The variety of rela-
17
tionships that exist between field offices, headquarters and contrac-

tors will continue as a root cause for complexity, confusion and lack
of efficient, effective performance. And finally 1999, mandated by
this Congress, the Chiles report, which you are all familiar with,
I am sure, says a thorough revamping to institute streamlined, effi-
cient management would send a strong signal throughout the com-
plex that DOE takes its weapons programs seriously.
Now, also this year in 1999, GAO, I believe at the request of this
committee, In the final analysis security problems reflect the lack
of accountability.
Now, I go through that not for dramatic effect, but to impress on
this committee that this is not a security issue. This is not a coun-
terintelligence issue. Those are only symptoms. This is totally dys-
functional unless you change it; no matter the caliber of the people
that Bill Richardson brings in, it will happen again.
Let me go through the remaining 8 or 10 pages without repeat-
ing myself. I believe that Congress and the President have an op-
portunity to do what no one has done before, and that is because
of the environment in which this all takes place. I want to say to
you that as a former Member of the Congress, I think you would
all agree with me we are a lot like a fire department. We tend to
respond to the latest fire. Had it not been for the New York Times
breaking this story, had it not been for Chris Cox and Norm Dicks
and the excellent work that they did, I daresay that the President
would probably not have asked PFIAB to do this. I wouldnt be
here today, and business would go on as usual.
That is a troubling thing to me. It shouldnt take the press to
galvanize our own institutional responsibilities. And I use the word
our because I still in my way feel as an alumni of this great legis-
lative institution called the U.S. Congress.
You certainly have enough evidence here. I dont understand.
Maybe Chairman Dingell, Chairman Bliley will understand why
something didnt happen before. Maybe people tried. But we found
evidence of this bureaucracy managing to fight off every major re-
form that was tried until the man on the left, and I have high re-
gard for what he has done, and I want to put that on the record.
Now, let me first talk about the models. We have just come from
3 hours over at the Senate, and we are able to disagree without
being disagreeable. Why we recommend a semiautonomous agency
is no accident. This was nothing that we came up with just sud-
denly a flash of lightning. We looked at agencies that had very in-
teresting scientific and technical responsibilities contained within
larger departments that had dissimilar functions, and we found
four, and they work. The National Security Agency is part of DOD,
yet the Secretary of defense has total responsibility and authority
to run that agency. Defense Advanced Research Projects Agency,
DARPA, huge, does extraordinary scientific work, part of the De-
partment of Defense, but a separate agency; NOAA, part of the De-
partment of Commerce, responsible to the Secretary; and finally
the NRO, which we cant talk about much in unclassified session,
but which does extraordinary work, very similar in some ways in
terms of contracting and research, but with a totally different man-
agement structure and none of the problems that we have seen
here. That is why we made this recommendation.
18
Let me say one other thing and just put this prepared text to-
tally aside because I want to wind up in time. A question has been
raised by former Chairman Dingell in a letter that was written to
this committee in response to the Kyl-Domenici proposal. That let-
ter was written before our proposal ever was published by a matter
of weeks. One of the things that Dr. Drell pointed out to usand
if you look at our organizational chartwas a very strong point
made by several people here, and I want to just assure you of what
we are doing. You cant separate science of the Department of En-
ergy from these labs. They do biological research, they do
mathematic research, they do computer research, many other
things. So we maintain a strong link. That is why although you
will find in our report there are two models we give you, one like
NASA, which take it separately, pull it out of DOE, make it di-
rectly accountable to the President, or make it a separate agency,
or, if you will, administration, directly responsible to the Secretary,
but still within DOE.
We opt, I opt, for the second one because of the incredible science
that is done, and you ought not to separate that. But what you
have now is a dysfunctional bureaucracy. And what we have put
together is what we have modeled after those bureaucracies within
this government that work.
Finally, the most incredible thing that we came across was this
IDA, Institute for Defense Analysis, report, which this Congress
authorized, this Congress appropriated money for. This is a superb
report. It mirrors much of what we have said, and yet it appeared
to go in some dust bin. And I would just say to you, Mr. Chairman,
that there is not much disagreement between the Secretary and
myself except he continues to say, I dont want a semiautonomous
agency. And I said to him privately and publicly I dont really un-
derstand that. The language we recommend in this semi-
autonomous agency is, notwithstanding any other provision of this
law or act, the Director of the Agency for Nuclear Stewardship,
who also serves as an under Secretary of Energy, shall report di-
rectly to and be responsible directly to the Secretary of Energy,
which shall be the Directors immediate superior. That is not our
language. That is the language from the existing agencies around
this government.
So, Mr. Chairman, I will stop right there.
[The prepared statement of Hon. Warren B. Rudman follows:]
PREPARED STATEMENT OF HON. WARREN RUDMAN, CHAIRMAN, PRESIDENTS FOREIGN
INTELLIGENCE ADVISORY BOARD
Distinguished members of the House Commerce Committee. Let me first say
thank you for the invitation to appear here today.
I know there is rarely enough time to discuss all the issues that are raised in a
report such as this, so I would like to make just a few introductory comments, give
you a brief synopsis of the PFIAB panels report, and then move straight on to the
questions and answers.
Introduction
Let me say first that we had one major objective with this report. There is nothing
more important to Americas long-term national security interests than security of
our nuclear secrets. And that security has been atrocious for a long time. But report
after report has been tossed up on the shelf to gather dust. So our objective was
to write a report that would stick, that would actually make a substantial difference
in the way that security at the labs is handled.
19
I had our staff sit down and add up the number of reports that have found prob-
lems with security at DOE for the past 20 years. The numbers are astounding.
29 reports from the General Accounting Office;
61 internal DOE reports; and,
More than a dozen reports from special task forces and ad hoc panels.
Altogether that is more than 100 reports, or an average of 5 critical reports a year
for the past two decades. And here we are, 20 years down the road, still battling
with the same issues. Thats unacceptable.
Even more unacceptable to our panel would be adding this report to that list of
more than 100 reports.
We wanted to cut through the fog of the bureaucratic jargon and wishy-washy
language that has worked to protect the status quo over the years.
So our objective was to take the major security issues one-by-one, and address
them directly and forcefully. We did that. And I want to commend my colleagues
Ann Caracristi, Stephen Friedman, and Dr. Sidney Drellfor working with me to
do that. This was not an easy report to put together. But they, and the members
of the PFIAB staff and adjunct staff, put in long hours to get it right, to make sure
it was rock-solid on the facts, and to get it done on time. And I think they did an
extraordinary job.
That is also why I think President Clinton also deserves a great deal of credit.
We had some very tough words for the Administration in this report. But he agreed
to release it to the publicsomething that has never been done in the history of
the PFIABand put this issue on the table. And I must say that when we briefed
him, he was very appreciative of the work that we had done, because he recognizes
how important it is.
Restoring Accountability
Theres an old saying among New Hampshire farmers. They say: If it aint broke,
dont fix it. I have a corollary: If its badly broken, dont fix itreplace it!
This report finds that the Department of Energy is badly broken. And it is long
past time for half-measures and patchwork solutions. It is time to fundamentally
restructure the management of the nuclear weapons labs and establish a system
that holds people accountable.
Thats what it comes down to. Its not just about security. If youve ever been to
one of these labs, you know they put up one heck of a fence. And its not just about
counterintelligence. Its about whether we are going to have a system of manage-
ment that holds each and every person responsible for the security of these labs.
No President or Energy Secretary or Committee Chairman can guarantee that the
laws on the books are going to provide absolute security. But when management of
these labs is on our watch, we can and should demand absolute accountability. So
thats what our report has proposed: alternatives that we think will help the leader-
ship impress the seriousness of this responsibility on the people within the organiza-
tion.
Background and Root Causes
Let me say a word about what we found.
We found that these labs are not only the crown jewels of the U.S. scientific estab-
lishment. They are the crown jewels of the world scientific establishment.
We visited several of the labs, and I can tell you that their work is truly phe-
nomenal. And I want to be clear that nothing we say in this report is intended as
criticism of the scientific research and development at the labs. Nor do we want to
do anything to undermine their effectiveness. We want to improve their security,
their counterintelligence, and the accountability that allows them to continue to do
their job.
We found that maintaining security and strong counterintelligence at the weapons
labs, even under ideal circumstances, is challenging. Part of the difficulty comes
from the inherent character of the work at the weapons labs:
an international enterprise;
requiring collaboration across bureaucratic lines;
involving public/private cooperation;
amid a culture of scientific research.
The inherent problems have been made worse over the years because the weapons
labs have been incorporated within a huge bureaucracy that has not made security
a priority. The Department has been distracted by other national imperatives, such
as the cleanup of radioactive waste and DOEs role in the national drive for clean
and efficient energy, etc.
20
Recurring Problems
We found evidence and heard testimony that was appalling in six critical areas:
security management and planning; physical security; personnel security; informa-
tion security; nuclear materials accounting; and foreign visitors (counterintel-
ligence).
There has been report after report of serious security failings; here are but a few
examples . . .
We found recent cases of:
Foreign scientists visiting labs without proper background checks and monitoring.
Classified computer systems and networks with innumerable vulnerabilities.
Top-level bureaucrats who could not say exactly to whom they were accountable.
Instances where secure areas were left unsecure for years.
Thousands of employees being granted security clearances without good reason.
In the middle of all this, there were confirmed cases of espionage, the damage
from which we may never know.
And as you can see from the chart that shows how long it took to fix even the
very basic security problems, some of the evidence that we found simply boggles the
mind.
How can it be that it took less than three years to construct the first weapons
labs and build an atomic bomb, but in our time it takes nearly four years for some-
one to fix the lock on a door protecting nuclear secrets?
Responses and Responsibilities
There is not a person in this roomand I would add theres probably not a person
in the Department of Energywho, when confronted with that kind of record would
say that this is tolerable. It is not. It is intolerable. In fact, it is a disgrace to the
nation.
If that is the case, then why have these things been allowed to go on, year after
year? DOE has had so many overlapping and competing lines of authority that peo-
ple are rarely held accountable for failures. Just to give you an example, I want you
take a look at a chart that I brought.
A couple of years ago, the Defense Department made an honest attempt to track
the chain of responsibility for protection of the nuclear-related operations at the De-
partment of Energy. This is what they came up with.
If anyone in this room can make sense out of this management structure you
ought to be a brain surgeon instead of a Member of Congress.
Let me be clear: there is plenty of blame to go around. No administration can
claim it gave this problem sufficient attention, let alone took the proper steps to
solve it.
Several Secretaries have tried some type of reform at one time or another. And
there were attempts to try to improve management effectiveness and account-
abilitybut within the confines of the DOE bureaucracy. The problem is that the
DOE bureaucrats and lab employees have been able to wait out the reform initia-
tives and then revert to form.
Because of the overwhelming weight of damning evidence of security failures, and
the profound responsibility that comes with the stewardship of nuclear weapons
technology, it is time to fundamentally restructure the lines of authority so that the
weapons labs and their security are Job Number One within a substantially auton-
omous agency.
Even in the current uproar over the Cox Committee report (and related events),
PFIAB found as late as last week indifference and business as usual at some levels
at the labs. For example, there has been incomplete implementation of computer se-
curity measures and foot-dragging on implementation of a good polygraph program.
Just yesterday, there were reports of strong opposition to the use of polygraphs
at the weapons laboratories.
If the current scandal, plus the best efforts of Bill Richardson are not enough,
only a fundamental and lasting restructuring will be sufficient
Looking Ahead
The Congress and the President have an opportunity to do what none of their
predecessors have done: step up to the plate and make a lasting reform through a
fundamental restructuring of DOE
PFIAB offers two alternatives that will make accountability clear and streamline
reporting channels: A semi-autonomous agency; and, A completely independent
agency.
I would like to note, parenthetically, that we call for the integration of the DOE
Office of Naval Reactors into the new Agency for Nuclear Stewardship. We rec-
ommend this because we believe that the ANS should be the repository for all de-
21
fense-related activities in the DOE. However, we believe the Office of Naval Reac-
tors must retain its current structure and legal authority under which its director
is a dual-hatted official of both DOD and DOE.
Our panel debated the merits and demerits of these reorganization proposals. But
we came down in full agreement on one principle and from that principle we will
not deviate: the nuclear weapons labs need to be semi-autonomous from the Depart-
ment of Energy as a whole, and that change needs to be substantial and codified.
It is not enough to change policy from the top, we have to change the culture, pri-
orities, and implementation at the ground level.
That will require very strong leadership plus an organization that allows people
to be held fully and directly accountable for their actions.
Response to Hint about Cooperation
Someone asked me if it was merely a coincidence that the PFIAB panels rec-
ommendations for a semi-autonomous agency were similar to those proposed by
some in Congress.
Foremost, I will state unequivocally and for the record that there was no collabo-
ration with the Congress on our findings or our recommendations.
Second, I would remind people that we did not endorse a single solution, although
I would have much preferred to do so. We sketched two alternatives and, as a panel,
purposely did not favor one over the other.
Finally, none of the conclusions that we reached or alternatives that we consid-
ered are new. After looking at the 100 or so of these critical reports, the fact that
we reached similar conclusions was not a matter of coincidence. It was destiny.
Just look at the record.
In 1976, federal officials studied the operation of the weapons labs and considered
three possible solutions: placing the weapons labs under the Department of Defense,
making them a freestanding agency, or leaving them within the Energy Research
and Development Administration. They opted for the status quo.
In 1979, an internal management audit of DOE found that its top management
was poorly organized, its planning was spotty, and its field structure was not inte-
grated into headquarters staff. When asked who was in charge of the field offices,
the Secretary of Energy at the time said he would have to consult an organizational
chart. One employee said that DOE was about as well organized as the Titanic was
in its 11th hour. But again, the status quo prevailed.
In 1981, the incoming Reagan Administration, led by OMB, evaluated whether to
dismantle the Department of Energy and place its nuclear operations with an inde-
pendent agency. The idea was dead in less than a year.
In 1985, the Reagan Administration appointed a blue-ribbon panel appointed to
study DOEs security and organization problems. Again, Congress and federal offi-
cials weighed whether the weapons labs should be transferred to the Department
of Defense or DOE should be restructured to be given more autonomy to the labs.
The status quo prevailed.
In 1995, the Galvin report said that it was hard to reach any other conclusion
than that the current system of governances of these laboratories is broken and
should be replaced with a bold alternative. That report recommended an alter-
native structure . . . that achieves greater independence. But the status quo pre-
vailed.
In 1997, the Institute for Defense Analysis issued a very detailed report.
This was a report that was proposed by Congress. You authorized it. And you paid
for it. You must have paid a lot of money for it, because it was very thorough. Its
conclusions were very clear and very similar to those of our panel. Nothing hap-
pened.
Every time a President or Energy Secretary or Congress has run up against the
DOE bureaucrats, the bureaucrats have won. They are fully aware of that fact. And
if you let them, they will win again in the future.
It reminds me of what a current DOE official told our panel just a few weeks ago.
He said that the attitude of the people deep inside the bureaucracy is WE-BE.
Their attitude toward the leadership is WE BE here when you came, and WE BE
here when youre gone. So we dont have to take you seriously.
That is arrogance. That is the type of arrogance that enables DOE bureaucrats
to ignore a direct order from the highest authority in the Executive Branch. In other
words, their response to a direct order from the President of the United States was
not Yes, sir or even Yes. It was maybe.
I have yet to meet a general who believed he could win a war with soldiers who
will not obey orders and are never punished for failure to do their duty. That is
what we have in DOE. This is not a security or counterintelligence problem. It is
an accountability problem.
22
Secretary Richardson
I think it would be useful at this point to say a word about Secretary Richardsons
recent initiatives.
I have a high regard for Secretary Richardson and I think that he has been work-
ing very hard to carry out his dutyas he perceives itto address these problems.
I would also like to commend the Secretary for bringing both Ed Curran and Gen-
eral Habiger in to address the problems at the labs. Both have impeccable creden-
tials and a no-nonsense approach to getting things done.
But as good as Ed Curran and General Habiger are, they cannot make up for the
culture of arrogance, the pervasive disregard for security and counterintelligence
issues, and the lack of accountability in the Department.
The problem, as we see it, is that Secretary Richardson will be gone in 18 months,
and it is not clear that these two very capable men, under a new secretary, will be
allowed to remain indefinitely.
Most of the events that precipitated this current uproar occurred before Secretary
Richardson arrived on the scene in 1998. Because he has been at the tip of this
sword, he has been sensitized to these security problems and has worked very hard
at them.
But one thing is certain: the next Secretary will have different priorities and be
pulled in a different direction by other emergencies.
Secretary Watkins, for example, had excellent credentials on security issues. But
when he became Energy Secretary he was immediately besieged by the public out-
cry over the handling of environmental issues. Congress also diverted its attention
to address these issuesand rightly so.
Unfortunately, the reality is that the American body politic works like a fire de-
partment. It responds to the latest fires.
That is why Congress and the President must institutionalize these changes in
the Department of Energy by embedding them in the statutes and implementing
them at every level.
Regardless of whatever issue is occupying the Congress or the Executive Branch,
the people in charge of security and counterintelligence at the nuclear weapons labs
need to have the tools and the structure that allow them to do their jobs.
The fundamental issue of accountability and how well it is instilled in the atti-
tudes and actions of individuals within the labs is going to remain regardless of
which President, which Energy Secretary, or which Congress is in office at any one
time.
Conclusion
So I hope that you, in this Congress, and the President can work together on this.
Nothing about this is politically easy. Jobs are at stake. And it is hard for people
who have so much vested in the existing system to admit that it simply does not
work. But I do hope that the Congress and the President can reach an accord. This
is a matter of tremendous gravity for our national security. And I think everyone
here will agree that it should be above partisan politics.
I also believe that solving these security and counterintelligence problems within
DOE will ultimately help the Department to better address its many other missions.
I want to commend Congressman John Dingell, in particular, for his steadfast ef-
forts over the past two decades to try to remedy so many of the problems at DOE.
Our panel agrees with the Congressman that the pervasive lack of accountability
undermines not just security and counterintelligence, but the work of the Depart-
ment in many areas.
For example, the Congress, in restructuring DOE, should also look at the contrac-
tual relationships and evidence that the contractors have impeded and resisted fed-
erally mandated reforms.
Thank you again for inviting me to come up here. And I will be more than happy
to take any questions you have.
Chairman BLILEY. Thank you, Senator.
The Chair will recognize each member for 5 minutes for ques-
tions. I would ask that we not ask for extension of time because,
as I said at the outset of this hearing, that Senator Rudman has
a tight schedule, and we want to get everybody a chance to ask
their questions.
Chair recognizes himself for 5 minutes.
Mr. Secretary, according to press accounts, the November 1998
intelligence report provided to you and other top administration of-
23
ficials noted that 37 Chinese intelligence officers had visited or

been assigned to the labs or other Department sites over the last
5 years. GAO testified before our oversight subcommittee in April
that often the Department knew its foreign visitors were spies, but
felt that they could adequately monitor their access to sensitive
materials or had other defensive mechanisms in place.
You say that you are now doing 100 percent background checks
on foreign visitors to the labs, but given the history here, I am not
sure whether that means scientists whose backgrounds suggest ties
to intelligence agencies will actually be barred from the labs or
whether they will be permitted anyway on the theory that they can
be adequately monitored.
What exactly is the Departments policy on foreign visitors with
suspicious backgrounds, and will you commit to us today that no
known or suspected intelligence officers from sensitive countries
will ever again be permitted to have any contact with their labs or
their employees?
Mr. RICHARDSON. Mr. Chairman, I can commit that to you. I can
assure you that we have the best counterintelligence person in the
government in Ed Curran, who has had 37 years experience in the
espionage cases. We now have at this very moment 100 percent ca-
pability to do background checks on scientists from sensitive coun-
tries. That is a list includes Russia, China, India, Pakistan, several
others. We think our foreign visitors programit has been tightly
controlled. We are monitoring it closely. We have individuals from
the lab accompany some of these scientists to classified areas.
We have rejected potential visitors who raised suspicions, a cri-
teria that is important as these scientists have ties to intelligence
agencies. As I said, we have rejected groups and people, and it is
working well. And Mr. Curran can provide further details if you so
choose.
Chairman BLILEY. Thank you, Mr. Secretary.
Mr. Secretary, I have some questions about your proposal for a
new security czar to coordinate the disparate security functions of
the Department. I have seen reported that the czar would have
control over the now cross-cutting 800 million security budget,
which I believe would be essential to effective reform. But I note
that in the Departments recent press release announcing the hir-
ing of the czar, there is no mention of whether he will, in fact, have
this power which now resides with each Assistant Secretary and
lab director.
What are your plans in this regard? Will the czar have total
budget control and authority to order and pay for security up-
grades, or will the labs and the Assistant Secretary still be able to
block reforms?
Mr. RICHARDSON. I created a czar, Mr. Chairman, to precisely en-
sure that security is given a higher priority than it was before. And
it certainly was not given a higher priority before. General Habiger
for the first timeall the security budgets will be formed sepa-
rately from the rest of the program budgets. And we are talking
about $800 million.
What we talk about in cross-cutting budgets is General Habiger
will work with all the relevant Assistant Secretaries throughout
the whole complex and make sure that security is given a budget,
24
that it is properly administered, that it is handled, that it is not

siphoned off. In the past what you saw was security budgets si-
phoned off the programs. If you are a program director, you spend
it on your program and not security.
Chairman BLILEY. Well, who is going to have the final say if he
says, I need this security at Lawrence Livermore, and the lab direc-
tor says, well, we think that is too much, we dont think you need
that, and I am the Assistant Secretary?
Mr. RICHARDSON. The security czar will have the ultimate say
because he will have my backing, and he will determine the secu-
rity budgets.
Chairman BLILEY. All right. Well, thank you very much.
Senator, your report is quite candid, and I commend you for it.
I know that before it was issued, you briefed the President and
other White House officials on your findings and recommendations.
What was the White House reaction, and did anyone over there in-
dicate to you whether the President was prepared to accept your
reform recommendations?
Mr. RUDMAN. Mr. Chairman, it was a strange event. This was
not to be released until last Thursday. I got a call in New Hamp-
shire on Sunday the President wanted to be briefed on it Monday
morning last. So I flew back here, got the staff to get it together,
got it printed overnight, and saw him at 9 in the morning. He had
a call coming from Mr. Yeltsin following that. So we finished our
briefing. He thanked us, told me he appreciate what we have done,
would read it very carefully, and the phone rang. So I have no idea
what he thinks about it.
Chairman BLILEY. Thank you. I see my time has expired.
Now, I would like to recognize the gentleman from Michigan, the
ranking member, Mr. John Dingell.
Mr. DINGELL. Mr. Chairman, I thank you. Mr. Chairman, I ask
unanimous consent my opening statement be inserted in the
record.
Chairman BLILEY. Without objection all opening statements will
be inserted in the record.
Mr. DINGELL. Mr. Chairman, I wish that 5 minutes were enough
to express the high regard that I have for Senator Rudman and to
welcome him back, and also to welcome our old friend, a former
member of this committee, the Secretary.
Senator, the laboratory directors at Los Alamos and Lawrence
Livermore labs are employees of the University of California, not
the Department of Energy. The lab directors have day-do-day re-
sponsibility for security and computers, physical security, other
types of security. The government basically employs the University
of California as a contractor to manage employees and lab facilities.
You talked in your report of the culture of the defense labora-
tories, regarding it as arrogant, fractious, saturated with cynicism
and disregard for authority. You stated that to this day the labora-
tories are fighting security changes. Youshouldnt we fire a con-
tractor who behaves this way?
Mr. RUDMAN. This was not within the ambit of our charge, but
I am never one to avoid a direct question, Congressman Dingell, so
I will answer you. I think that the Secretary ought to look real
hard at every contractor that deals with DOE.
25
Now, let me say from a scientific point of view you cannot beat
what they have done so far. I think they are extraordinary.
Mr. DINGELL. But they provided a good bit of it to the Chinese.
Mr. RUDMAN. I did not have that in mind, but of course you are
correct. But I would make the observation that certainly the Sec-
retary is going to have to look at all its contractors, which, if I am
correct, the Secretarys predecessor fired a contractor at
Brookhaven for misdeeds and replaced that contractor. I think you
have got to be very careful changing contractors. These people do
very good work.
As you know, I am not from California, Mr. Dingell, I am from
New Hampshire, so I have no constituent interest. But it seems to
me that they not only have to do good science, but they have to do
good security.
Let me tell you something that may surprise the Secretary. I was
going to tell him this right after the hearing this morning, but he
left and headed over here, and I just missed him. I read a report
last evening, we have good sources at PFIAB, from an employee at
one of these laboratories who thought that the idea of computer se-
curity training today was nothing butto use a polite wordhog-
wash, and he would not attend.
Now, let me just say that there better be some discipline in this
process orit is one thing to lay down rules; it is something else
to get these people to obey these rules, which is one of the reasons
we want to see this thing carved out a bit.
Mr. DINGELL. Well, I would like to do a little carving on my own,
but it would probably take place on the persons of some of the peo-
ple who have been violating security.
Mr. Secretary, why dont we fire these contractors if they behave
the way the Senator and his commission say? Why do we keep peo-
ple on who are security risks and who are arrogant, haughty and
resist change?
Mr. RICHARDSON. Congressman, I have set a new policy with con-
tractors. In most every case since I have been on board, we have
recompeted contracts. We think that this is a good use of taxpayer
money. This is in line with what the Congress wants to do and gets
us a better bang for the buck. I will reassessI personally get in-
volved in look looking at every contract. I will look at the lab con-
tract. I will say that we have had dramatic improvement in the at-
titude of the lab employees in terms of observing security proce-
dures.
What Senator Rudman mentioned is that I ordered a stand-down
the last 2 days after reading the Rudman report. A stand-down at
the nuclear weapons labs isbasically I shut them all down for 3
days2 days, so that we look at all security, cybersecurity, com-
puters and see where we are.
Now, I would wish you would tell me about this employee. I will
say one more thing.
Mr. DINGELL. My time is limited, Mr. Secretary, and I do this
with all respect. We have talked about a semiautonomous or inde-
pendent or semi-independent agency. Frankly, we have seen this
kind of structure. It is call the Atomic Energy Commission. It
didnt work. It had no accountability. Every place it dealt with is
now a cesspool of contamination, atomic and otherwise. It dripped
26
abuses, and it was run not by the U.S. Government, but by the con-
tractors.
How is it we can expect a semiautonomous agency to behave any
better than the AEC did in times past?
Mr. RUDMAN. Fair question, Mr. Dingell. Let me simply say that
that is why we think it should not beeven though we gave the
Congress two independent kinds of looks at it, one totally autono-
mous, like NASAwe looked back at the AEC experience, the fold-
ing in of all these agencies, we believe it needs Cabinet-level super-
vision. That is why we believe it ought to be within the DOE as
an agency or an administration. As a matter of fact, as the Sec-
retary I am sure will tell you, his latest proposal almost mirrors
ours with some exceptions, but does not make it semiautonomous,
creates an Under Secretary. We believe that because this gen-
tleman will not be there more than another 18 months, unless he
is truly a glutton for punishment and wants to serve another 4
years, I assume that General Habiger might be there or might not
be there, I assume Mr. Curran might be there or might not be
there, we are concerned about the future. That is why we want to
carve it out, if you will, semiautonomous.
I dont think the AEC is a good example. NSA is a much better
example.
Mr. DINGELL. I ask unanimous consent to be permitted to send
written questions to our two witnesses and they be inserted into
the record.
Chairman BLILEY. Without objection, all members, since time is
extremely limited today, will be able to send written questions to
the witnesses.
At this time I would like to recognize the gentleman from Texas,
the chairman of the Energy and Power Subcommittee, Mr. Barton
for 5 minutes.
Mr. BARTON. Thank you, Mr. Chairman. And I am basically
going to give a statement, then if I have a chance ask a question
or two, and be around for the second round. I think this is the most
serious issue that has come before our committee in the time that
I have been on it. I was chairman of the Oversight and Investiga-
tion Subcommittee the last two Congresses and has been pointed
out I am now chairman of the Energy and Power Subcommittee.
I am going to read some of the comments that were in the Rud-
man report; talks about a feckless system of control of classified
documents, underfunded and poorly trained counterintelligence
programs, security methods that were naive at best and dan-
gerously irresponsible at worst. That is a direct quote. It also talks
about the fact that these problems, when they were highlighted,
were blatantly and repeatedly ignored; placed the blame on organi-
zational disarray, managerial neglect and a culture of arrogance
both at DOE headquarters and at the labs themselves. Further-
more, the Rudman report states, and I quote again, the Depart-
ment of Energy and the weapon laboratories have a deeply rooted
culture of low regard for and at times hostility to security issues,
which have continuously frustrated the efforts of internal and ex-
ternal critics.
Finally the report says, never have the members of the special
investigative panel witnessed a bureaucratic culture so thoroughly
27
saturated with a cynicism and disregard for authority. Never before

has this panel found such a cavalier attitude toward one of the
most serious responsibilities in the Federal Government, control of
the design information relating to nuclear weapons. Never before
has the panel found an agency with the bureaucratic insolence to
dispute, delay, and resist implementation of a Presidential direc-
tive on security as the Departments bureaucracy tried to do to the
Presidential Decision Directive Number 16 issued in February
1998.
It doesnt say this in the report, but staff has indicated to the
members of the committee that since we have been attempting to
correct some of these problems, that same elitism and arrogance
and cynicism apparently is still in the laboratory.
So here are my recommendations, and they are not members of
the committee, they are not members of the subcommittee, but if
I were the Secretary of Energy, and if I were the new czar that is
sitting out there behind the Secretary, I would immediately take
whatever steps are necessary to terminate the contract with the
University of California, period. I would do that. I think they are
the root of the problem.
I would centralize or ask for legislation to centralize the jurisdic-
tion over the weapons laboratories within the House of Representa-
tives. Currently they are between the Science Committee, the En-
ergy and Commerce Committee and the Armed Services Com-
mittee. That is too many bosses. I think we need to take steps to
centralize that.
I think if it is possible under the Federal service rules, every
member of the weapons laboratory that it can be shown has exhib-
ited this arrogance and indifference should be terminated. I think
they should be asked to resign at a minimum. And if they wont
resign, I think they ought to be terminated.
I think the weapons bureaucracy should be downsized by statute
if necessary, by administrative action if possible.
And I think long term we should pass legislation to take the
weapons laboratories out of the Department of Energy. I dont
think the Department of Energy ever effectively managed them. I
think it is an impossible task. I think we should take them out, put
them in within the Department of Defense, the National Security
Administration, or some other Federal agency. Some may say that
that somehow violates the decision made after World War II to
keep weapons developments in civilian hands, but I would point
out that the Secretary of Defense is a civilian and is appointed by
the President of the United States.
So, in short, Mr. Chairman, I think this is a very serious issue.
I dont think it can be swept under the table. I dont think we can
spin-control it. I think it needs to be addressed immediately, effec-
tively, and comprehensively by the House and the Senate and with
the full cooperation of the Secretary of Energy and Senator Rud-
man and his panel and General Habiger, if he is the man that is
in charge of this.
So that is really not a question as much as it is a statement. I
guess my question to the Secretary would be do you think we can
terminate the contract at the University of California?
28
Mr. RICHARDSON. Congressman, I will make that decision after

I assess their performance, their improvements. As I said, I have
a policy of recompeting almost every contract, and I will apply the
same standards at the University of California.
Mr. BARTON. My time is expired, but let me simply say when
that came up several years ago, a decision was made by your pred-
ecessor not to recompete the contract, and it was given to the Uni-
versity of California again on a noncompetitive basis.
Chairman BLILEY. The time of gentleman has expired. The Chair
now recognizes gentleman from Pennsylvania, Mr. Klink.
Mr. KLINK. Thank you, Mr. Chairman. I am sitting here, and, of
course, I have read, Senator Rudman, your report. I am still left
with some blanks here. I hope you can help me fill them in.
Mr. RUDMAN. I will try.
Mr. KLINK. My problem is I dont see how exactly we can change
that lab culture that you referred to in the report if the contractor
is the same, the management is the same, the employees are the
same. You cited that stack of reports, and Congress, and GAO and
everybody else has done these reports, the Energy Department,
various agencies within it have done these reports saying there are
problems. Why in the world would this new administration pay any
more attention to someone else when the defense program has ig-
nored all of those reports, the DOE inspector general, General Ac-
counting Office, all of the reports that you have cited? You said
there were a hundred of them. You state that this group of people
is even unconvinced of Presidential authority. So I cant under-
stand why the same people in a new agency would all of a sudden
become convinced of Presidential authority, in particular when an
administrator would have a 5-year irrevocable term. Why would
they be all of a sudden convinced to do what is right and see the
light of God and bow to the altar?
Mr. RUDMAN. Let me try to answer that if I can. First they would
not necessarily be the same people; and number 2, there would be
a lot less of them.
I think that one of the most extraordinary things that has been
written on this was written yesterday in the Wall Street Journal
by a scholar at Brookings, Paul Light. Mr. Light did a little dif-
ferent analysis than we did and found the following: In 1979, there
were 10 layers of senior bureaucracy with 56 senior executives. In
1998, there were 18 layers with 143 senior executives. It takes 15
to 25 layers to get from the top of the Department to the top of
Los Alamos. So what we say is take a broom and sweep that inter-
mediate bureaucracy out, put accountability in directly from a posi-
tion where if something goes wrong, you know who to blame. We
are not talking about the moving the deck chairs, Congressman, we
are talking about really changing this organization.
Mr. KLINK. What I am really talking about is at the labs. You
stillhow do we know that we are going to have new people or we
are going have the same shrinkage of bureaucracy at the labs
themselves? We understand there are going to be changes at DOE,
but what is going to happen at the labs? Are we not going to have
the same people there who have looked at science only and not
29
looked at environment, have not looked at security, have not looked

at safety issues?
Mr. RUDMAN. Congressman, let me answer that question, which
is a very good one. If there is accountability and strong leadership
without intermediate layers of bureaucracy, and these organiza-
tions refuse to do as they are told, then I assume the Secretary
would replace them. This is, after all, U.S. Taxpayer money even
though they are being done by private universities or, in one case,
a private contractor.
What we are saying is that there has been no way for this bu-
reaucracy to work with these labs in an effective way because there
has been no straight-line accountability. Too many people have had
the responsibility to these labs, including an intermediate struc-
ture, which boggles the mind. And I submit that your staff ought
to show the staffing of area offices, regional offices, field offices,
laboratory offices. I mean, if anybody wants to avoid responsibility
in this structure, they can.
Now if you are saying that the identical people that are there
wont change, well, if you are right, then under the structure we
are recommending, I guess they will be replaced.
Mr. KLINK. Mr. Secretary, what do you plan to do to defense pro-
grams? What changes do you have in mind for defense programs?
Mr. RICHARDSON. Well, Congressman I have addressed Senator
Rudmans very accurate claim. I have put lines of responsibility
that are very clear. Under defense programs, you will eliminate
some of the middle layers. You give the Assistant Secretary for De-
fense Programs direct responsibility. You make that person ac-
countable. You have the field offices that are responsible for de-
fense programs report directly. Headquarters policy comes from
Washington, it comes from me, and that is very clear.
I think one of the things that we need to do is acknowledge that
there have been some reforms, and also to say that the labs dont
look at health, dont look at safety, dont look at security. With all
due respect, I will defend my lab employees. These are patriotic,
these are strong-willed people, they are scientists, but the culture
is changing.
How do you do that? By enforcing accountability, by having zero
tolerance policy for leaks, by telling them who is the boss, defense
programs and me.
I am ready to look at some of the Senators very good rec-
ommendations, upgrade the defense programs, create an Under
Secretary for Nuclear Stewardship. We are ready to do that, to
strengthen that, to better deal with security, to better deal with
many of the issues that you have asked.
Mr. KLINK. But, Mr. Secretary, do you agree with the comment
of the reporter with Senator Rudman that you have this bloated
bureaucracy and that there are, in fact, too many people doing too
many things, and if that is the case at the top of defense programs,
the top level of the defense level, not the intermediate level, the top
level, are you going to get rid of some people, narrow that down
to fewer bodies, more direct responsibility, or are we still going to
just shuffle the bodies around?
Mr. RICHARDSON. I dont accept the claim that we have too many
people. This Department has downsized 25 percent in the last 3
30
years, and I need strong people and plenty of good people to deal
with the defense programs. We are talking about nuclear weapons
here. If I need more security people, I am going to ask you for
them. So I am not necessarilyI am changing the boxes around to
eliminate the layers of bureaucracy, that is what I am doing with
defense programs, to have more accountability.
The problem is that Los Alamos and Sandia felt that they were
these independent operators, and they didnt have to answer to
anybody. That has changed. And I think we have to acknowledge
that that is happening. And I can tell you right now that the secu-
rity stand-down that we are doing with Los Alamos and Sandia
this very day, where everything has stopped, is working, and we
are getting our act together. And I think to just say that we are
beyond help or dysfunctional is not going to correct the problem.
Chairman BLILEY. The time of the gentleman has expired. The
Chair now recognizes the gentleman from Ohio, Mr. Oxley.
Mr. OXLEY. Thank you, Mr. Chairman.
Welcome, Senator Rudman and our old friend Bill Richardson.
Senator, you mentioned in your report the culture of arrogance.
Is that arrogance on the part of the DOE bureaucrats or on the
part of the contract researchers?
Mr. RUDMAN. About equal.
Mr. OXLEY. And you also described the DOE relationship with
the FBI counterintelligence experts up to the mid-1990s, quote,
strained at best. Where does that relationship stand now? Is DOE
making effective use of the FBIs capabilities?
Mr. RUDMAN. I believe Secretary Richardson has made major
progress in the areas of counterintelligence and security, including
relationships with those agencies and asking them for help, reach-
ing out try to reorganize things. We commend the Secretary. Had
I had a chance to give my entire statement, which, because of time,
I realized I couldnt, you would have found a section in there that
talks about what the Secretary has done.
We dont have a problem with that. We think he has done a
great deal. But we have serious concerns that this bureaucracy has
nine lives, and when Bill Richardson is off in New Mexico, wher-
ever he goes after his tenure, and Mr. Curran and General Habiger
are doing something else, and the new Secretary of Energy is faced
with a different kind of an issue, like Secretary Watkins was when
we had the problem with nuclear waste, environmental pollution,
I submit to you that there isnt anything in the record of a hundred
reports that convinces me that anything that the Secretary of En-
ergy does here or that the Congress does that does not radically re-
form the organization of this, you will fail and fail once more. I will
quote one of the finest corporate executives in America. Mr. Galvin,
Motorola, was asked to do an independent study. What did he say,
what, 4 years ago, 3 years ago? He said, unless you radically re-
structure this, it wont work.
Now, I understand bureaucracies. They are extraordinarily good
at perpetuating themselves. And this one may after we are all
done. PFIAB has no constituency, we have no obligation other than
as citizens. We reached this conclusion inescapably after reading 50
other reports. I have high regard for the Secretary and the people
31
that he kept. I have no confidence that that will continue once he

is gone.
Mr. OXLEY. Thank you.
Mr. Secretary, I would like you to respond to that particularly in
relation to how this culture of arrogance or this strained relation-
ship over the years came to exist between the FBI counterintel-
ligence operations and your employees.
Mr. RICHARDSON. Well, Congressman, I know you have experi-
ence with law enforcement and the FBI, so I want to be particu-
larly precise. Counterintelligence in the past, in this past adminis-
trations, in yours and mine, were not given the priority they de-
served at the labs. Counterintelligence types were dismissed, secu-
rity was not considered important, we are a science lab, et cetera.
That has changed. And I can assure you that my relationship with
Louis Freeh on many of these law enforcement issues, issues relat-
ing to the suspect, issues relating to the counterintelligence plan,
is excellent.
I have an FBI agent running the counterintelligence program at
all of our labs at DOE. It is Ed Curran, 37 years experience, has
been involved in the Ames and Nicholson espionage cases. He is
the best in the business. And I believe that our plan is working.
Our counterintelligence budget has quadrupled. It is close to $50
million thanks to the help of the Congress. We have FBI and coun-
terintelligence people at each of the labs. We are not perfect. We
can use some improvements, but we have got a good relationship
right now.
And I want that counterintelligence director to report directly to
me, to have direct access to me. And I have some concerns about
that counterintelligence person reporting through another entity.
But I think this is something that we can work out.
Mr. OXLEY. What other entity?
Mr. RICHARDSON. Well, under a semiautonomous agency, I just
want to make sure that the counterintelligence chief has direct ac-
cess to me and reports directly to me.
I want to make one final point, Congressman Oxley. We have
said we are ready in the administration to codify many of these
changes sugggested by Senator Rudman and by Congressman Cox
and Dicks committee. Many of you all already voted in the armed
services bill for some codification in the counterintelligence area,
provisions that we think are quite good.
Mr. OXLEY. Thank you, Mr. Chairman.
Chairman BLILEY. The time of the gentleman has expired. The
Chair now recognizes the gentleman from Ohio, Mr. Sawyer.
Mr. SAWYER. Thank you, Mr. Chairman.
Thank you both for being here and for your candor today.
Mr. Secretary, the recommendations that have been made by
Senator Rudmans panel have focused on certainly the highest risk
arena of the work that you do in terms of nuclear weapons. But
let me ask you, are there other arenas that demand security that
are unaddressed by the report as you understand it?
Mr. RICHARDSON. Yes. And this is why I want a security czar
that deals with the entire complex. We have security problems in
our nuclear materials in fissile materials. For instance, Rocky Flats
contains nuclear materials. It wouldnt be covered under this very
32
good reorganization that the Senator has proposed. And what I am

simply saying is lets go beyond his security concerns for the nu-
clear weapon complex. Lets deal with security at science labs, too.
You have sites in Ohio that deserve better security. And so what
I want to do is have a comprehensive approach to security. This is
why we have General Habiger as the security czar, a czar that
would control and be able to deal with security across the complex.
Mr. SAWYER. Let me offer another thought that underlies, I
think, a great deal of what both of you are saying. The culture of
science, it seems to me, has always been made as rich as it has
been in the United States by its openness, by the culture of peer
review, of sharing ideas, leaving them open to competition and let-
ting them be criticized.
That is clearly in direct conflict and in deep tension with the
kind of work that is done in weapons labs and in the settings
where the science that underlies weapons technology is developed.
It seems to me that part of our problem is to try to retain the rich-
ness of that scientific interaction and the capacity to question one
another at the same time we are protecting the security of the
technology. Would either of you care to talk about that and the con-
sequences of the two different structures that you have offered for
that particular tension between science and technology and weap-
ons?
Mr. RUDMAN. Mr. Sawyer, I will be brief. You have just elo-
quently essentially stated one of the things that we state in our re-
port. In fact, we say in the report, and probably not as well as you
said it, with either proposal it will be important for the weapons
labs to maintain the scientific contact on a nonclassified scientific
research with other DO labs and the wider scientific community.
To do otherwise would work to the detriment of the Nations sci-
entific progress and security over the long run. This argument
draws on history. Nations that honor, advance freedom of inquiry
have fared better than those who have sought to arbitrarily sup-
press and control the community of science, which is what you
have said.
I happen to think that you could do it quite well in either model
that we have advanced. Certainly the current model promotes that,
but unfortunately it allows other things to happen.
Mr. SAWYER. Mr. Secretary, could you talk to that point as well?
Mr. RICHARDSON. I think we have a little bit of a difference, be-
cause if you look at these labs, you go to Los Alamos, Sandia,
Livermore, right next to each other you have nuclear weapons work
and life sciences. You have environmental science. And I am con-
cerned, by giving such separation, that you are going to cutoff the
essential science work from the weapons work. It is not a very big
difference that we have, because I think we could accomplish both
by acknowledging that the weapons labs, at least the nuclear weap-
ons labs, their major mission is national security work. And we are
ready to create an Under Secretary that gives them priority, that
gives them strength. What I dont want to do is blur the lines of
authority that I would have between the two science and national
security components.
Mr. RUDMAN. I would simply say, Congressman Sawyer, if you
look at page 47, in the interest of time I am not going to read it,
33
the very point that you have just addressed with the Secretary is
covered there. We agree with you totally, and we think we have ad-
dressed it in this report. The middle of page 47.
Mr. SAWYER. Mr. Chairman, I see my time has expired.
Chairman BLILEY. The Chair now recognizes the gentleman from
Michigan, Mr. Upton.
Mr. UPTON. Thank you, Mr. Chairman.
And welcome to you both, our two witnesses today.
As I have begun to look at the Rudman report, and I have looked
over a number of the GAO reports and talked to folks at DOE, I
know that there is no more important a job than security at these
labs. As I talk to constituents across the country, they want to
make sure that, in fact, these labs are safe. And they are appalled,
as you indicated, Senator Rudman, in your testimony over some of
the details that have been shed in the New York times and other
reports.
And, Secretary Richardson, I notice back in May, on May 25, you
said, I can assure the American people that their nuclear secrets
are now safe at the labs. Yet when I see and read the Rudman re-
port and enormous backlogs of security, background checks that
havent been undertaken, the polygraph tests, we look at some of
the labs in terms of, you know, the hogwash item that Senator
Rudman raised, it doesnt seem like it all comes together. And it
almost goes back to 5 Senator Rudmans comments at the very be-
ginning when he said that there were folks that wanted to just
delay and delay and fight off every major reform, and in the end
nothing happens, and afraid that a few years from now the same
report will be back. How do you put the two comment s in sync?
Mr. RICHARDSON. Well, first of all, I think if you read Senator
Rudmans reportand I will let him speak for himselfhe does ac-
knowledge that progress has been made in security and counter-
intelligence measures. He does say he doesnt think we have gone
far enough. But I think progress is acknowledged.
Second, what I meant in that statement was that we were ad-
dressing the security lapses with our best efforts at counterintel-
ligence, our best efforts at security. I can say to you that the Presi-
dential directive of February 1998, his counterintelligence meas-
ures are in place. I think that is acknowledged in the report; sec-
ond, that 85 percent of the top tier recommendations are in place,
we have a polygraph plan in place. You got to do it carefully. You
cant just polygraph anybody. It has got to be done on substance,
not on life-style. It has got to be prepared properly because they
are controversial. And we are one of the few agencies that is doing
it.
Our foreign visitors program, I believe Mr. Curran will tell you,
100 percent of the background checks are taking place.
Mr. UPTON. So that is happening now; the background checks on
all foreign visitors are happening now?
Mr. RICHARDSON. Yes.
Mr. UPTON. Is that for folks that are staying here more than 30
days or less?
Mr. RICHARDSON. This is any scientist from a sensitive country,
100 percent of the background checks are being done now.
34
They are happening. And I have saidI have been on the record
on this before, but what I want, Congressman, is if there is a prob-
lem and somebody says, all right, your statement is not 100 per-
cent correct that the nuclear secrets are not safe and secure, I want
to see the evidence. Show me who is not observing counterintel-
ligence and security policy. Give me some concrete examples, and
I will take action.
I am the one out in the trenches doing this, and I want to hear
directly. I think Senator Rudman has pointed out some areas that
we need to work on. We are doing that. Congressman Coxs report
did, too. But I need direct evidence so I can correct the problem.
There have been some that say, well, you know, the security is not
happening. I want to see tangible proof of violations of problems so
I can act on them.
Mr. UPTON. Now, you saidSecretary Richardson, you said in
your opening statement that the Rudman report was hard-hitting
and thorough, yet you told Los Angeles Times last week, I want to
see evidence from the malcontents he has been talking to, referring
to Senator Rudman; I want to see evidence of nuclear security
problems.
How does last week fit with this week?
Mr. RICHARDSON. Well, very clearly.
Mr. UPTON. Other than the fact that you are here today.
Mr. RICHARDSON. Well, very clearly. A lot of malcontents went to
Senator Rudman. I want those malcontents to come to me and tell
me where these problems are. You know, I am ready to talk to dis-
sidents and malcontents, and I have done so, but I want the evi-
dence. I want to see where we are weak. That is what I meant.
And I encourage the process of whistle-blowers, from those who
see problems. As part of these reforms, there is an independent
commission that is being proposed by Senator Warner of Virginia.
I am ready to accept it, outside scrutiny, independent oversight,
something this committee has always wanted, independent over-
sight so we can send somebody to the labs on a moments notice
unannounced to see if there are problems. I am ready to undertake
that scrutiny.
Mr. RUDMAN. May I just have one brief response? There was
something said there I cannot leave. I am not sure the Secretary
meant it the way it came out; at least I hope he didnt. We didnt
have any volunteers come to see us. We didnt have a bunch of mal-
contents, you know, coming in from New Mexico and Oakland and
Ohio and saying, let me tell you about this horrible place that I
work. We carefully selected who we invited to come in to an intense
session before the PFIAB, behind closed doors. And a lot of those
folks, I will tell the Secretary, were fairly high-level folks in your
Department or across the country, former Secretaries, former depu-
ties, current people with high positions. They werent malcontents.
They were people who had concerns.
I want to just correct that mischaracterization.
Chairman BLILEY. Thank you.
The Chair now recognizes the gentleman from Wisconsin, Mr.
Barrett.
Mr. BARRETT. Thank you, Mr. Chairman, and welcome to you
both. It is a pleasure to have you here. You will have to excuse me.
35
I just came in late, and, frankly, I am just trying to get up to speed

on this, so some of my questions might be pretty elementary. They
pretty much relate to the whole issue of external regulation, and
I know, Senator Rudman, that you were the one who basically
chaired the report or put the report together.
In preparing this report did your panel make recommendations
as to whether the Departments nuclear programs should be subject
to external regulation?
Mr. RUDMAN. Would you define external regulation for me?
Mr. BARRETT. No, I wont. I am not saying that to be flippant.
I am just curious so I have a better understanding as to whether
you did look at the whole issue of external regulation.
Mr. RUDMAN. We did not. That was not within our charge at all.
We looked at security issues alone. And the answer is no.
Mr. BARRETT. Okay. Just because it wasnt part of the charge.
Mr. RUDMAN. It was not at all.
Mr. BARRETT. I may be showing you my ignorance, but I want
to be sure I understand exactly what the panel did.
The Defense Nuclear Facility Safety Board, what do you see as
its role, and what did the panel see as its role?
Mr. RUDMAN. Well, they are an oversight group. There are sev-
eral others. We seriously question whether they have been working
the way they should work. We believe that one of the reasons none
of these oversight groups works very well is it is too much bureauc-
racy to layer.
I will disagree with an earlier statement that the Secretary
made. I dont argue with the fact that you might need more secu-
rity people, more FBI people, but I will tell you when you look at
the slots, and all of the offices leading up above the laboratories all
the way to the Secretary, I think it is so cumbersome up there, and
that was the point of an interesting piece by a scholar at Brookings
yesterday that was in the Wall Street Journal. I think you have got
to slim the place down.
Mr. BARRETT. I understand that, but, again, so I understand the
role of your panel, did it gauge the performance at all of that
board?
Mr. RUDMAN. We did not particularly look at the performance of
the board. We did not. We looked at the performance of another
board, I think, with another name.
Now, what is the name of that one?
The Security Management Board, which was supposed to solve
some problems, only met, I dont know, two or three times over a
long period of time, and some of the members felt that they didnt
accomplish very much, and I guess they were right.
Mr. BARRETT. Okay. And under your proposals would the defense
board continue to exist? What role do you foresee?
Mr. RUDMAN. We have left that open. That is up to the Congress
to decide. We believe that Senator Warner has made a pretty good
proposal on the Senate side. It was made before the report was
written, so we embodied it in this report as an independent over-
sight board. Now, the Secretary might want other oversight boards,
but I would think one good one over this part of the agency would
suffice.
36
Mr. BARRETT. Would your recommendations about a new over-

sight agency, is thatagain, is that driven by the security con-
cerns?
Mr. RUDMAN. It is driven by a history that there has not been
sufficient oversight. And lets face it, Secretaries of departments as
big as this one have a lot of other responsibilities. If you have a
good independent oversight board that reports directly to you,
made up of outsiders that you pick carefully, they can be of enor-
mous help. I might point out that is precisely what the PFIAB is
of the President of the United States.
Mr. BARRETT. The reason I ask you about security, there are
other issues with nuclear facilities like health and safety. Who
would oversee those issues?
Mr. RUDMAN. The Secretary is better to answer that question.
We did not address that.
Mr. BARRETT. Okay. Mr. Secretary, again, if the defense board
were not to exist, what would be thewho would be responsible for
the health and safety concerns at the facilities?
Mr. RICHARDSON. Well, under my reorganization, health and
safety are given top priority, and I think they should be. We have
an Office of Safety, an independent oversight board and Office of
Safety that exists today. Safety has to be a top priority. I think
that every entity should be subject to health standards. I dont
think anybody should be immune just because you are a nuclear
weapons complex. I think that there should be independent over-
sight across the board.
Now, I am willing because of the importance of nuclear weapons
work, because of the security concerns that have been raised, to
give the nuclear weapons area an Under Secretary, an organization
of some kind, to better streamline. But I am wondering whether we
are excluding from proper oversight an entity that like anybody
else, like me, like you, should conform to certain safety and health
standards.
Mr. BARRETT. Thank you, Mr. Chairman.
Mr. UPTON [presiding]. Thank you.
Mr. Cox.
Mr. COX. Thank you very much.
I would like to pick up on the topic that was under discussion
a moment ago, and that is the malcontents, the people that are
coming in and talking to you, because I know that the Secretary
feels that he needs more evidence that these problems exist or that
otherwise we areactually I ought to let you tell me what you
think about why you are saying you need more evidence. What do
you mean by that, Mr. Secretary?
Mr. RICHARDSON. Well, what, Congressman Cox, I will do is go
straight to yourthe claim in your report that you made, and that
was that there were serious severe security problems remaining.
And I didnt get the sense in your report that thewhich was com-
pleted in Decemberthat you had acknowledged the number of
measures that we have made, and that was my reference. Now,
again
Mr. COX. I mean today. By the way, as you know from having
read the classified as well as the unclassified report, and now
enough of this has been made public that we can state is it here,
37
the source for that is Ed Curran, who testified under oath, and we
quoted from him with quotation marks around what he said in the
transcript.
Mr. RICHARDSON. But very clearly to you in open testimony
amended that to say
Mr. COX. No. No, it was not testimony, it was on a Sunday news
show months later.
Mr. RICHARDSON. Well, he very clearly stated that at this point
we had achieved 85 percent of our reforms.
Mr. COX. No, what he told us under oath it was going to be some-
time in the year 2000 before we could get around to this.
Mr. RICHARDSON. I wish Mr. Curran were here, but he con-
tradicts what you are saying.
Mr. COX. Well, he never did.
Mr. RICHARDSON. Well, I think you should ask him.
Mr. COX. Let me not argue with you here, because I think the
problem we are having is that we have now, the Presidents advi-
sory board coming to us, and they did a very fine job, and their
criticism of them was much more harsh than what was in our se-
lect committee report. And what they are saying is that they lis-
tened to people in a setting that permitted them to let their hair
down. These werent malcontents that walked in.
I guess my question is what would happen if we said instead of
PFIAB, the Presidents Foreign Intelligence Advisory Board, giving
people that they selected the opportunity to come in and say, you
are not going to be terminated for what you tell us, there is no
transcript made of what you said, we are not going to in any way
interfere in the process of taking your testimony with what it is
you have to say; what if instead we had to wait until somebody in
a much more formal way had to come in and talk to you, the Sec-
retary. Would we ever know anything?
Mr. RICHARDSON. I have not discouraged this process of either of
you or Senator Rudman talking to anybody he wants. In fact, I
have rewarded somebody who I felt was a whistle-blower who made
a difference, who persisted, a man by the name of Mr. Trulock, who
provided a lot of evidence to your committee. So I dont care who
talks to you. I dont care what scrutiny you put me under. All I
want is if you have evidence of problems, that you tell me about
those problems; and second, if there is progress being made, if
there are changes being made, if these changes are working, as Mr.
Curran and others are trying to implement, that you acknowledge
it. That is all I am asking. And I fail to see that acknowledgment
of the dramatic steps that we have taken.
Mr. COX. As you know, our report was written in December 1998,
and it was accurate as of that date. So I would ask the chairman
of the Investigative Task Force and the president of the Presidents
Foreign Intelligent Advisory Board, who is with us today, who I
wish to commend for your work, what has changed, and do you dis-
count the evidence that you heard in these interviews that you con-
ducted? Is there enough change now that we are in June that we
can say these problems are behind us?
Mr. RUDMAN. No, of course not. And I dont think the Secretary
it seems like ships passing in the night. I dont think the Secretary
is testifying here today that everything is safe and secure. I think
38
the Secretary is probably saying they put a lot of things in place

to try to make that happen. I will tell you unequivocally I dont be-
lieve that no matter what they do, with all theif you passed a bill
tomorrow, the President signed it, you did exactly what we said,
created an agency within the Department, kept counterintelligence
reporting to the Secretary, did all of that, it will take a couple, 3
years before you can have an assurance that you got a safe situa-
tion out there. Counterintelligence, poly graphing, all of this takes
enormous amounts of time.
No, I dont think that it is safe now. I dont think the Secretary
does. But let me just disagree with one thing so everybody knows
where I am coming from. There is not a question of whether or not
you can prove that the Cox committees findings were all right, or
some were right and some were wrong. You and I have discussed
this, Congressman Cox. We say in our report, we agree with a lot
of it; we dont agree with all the conclusions. And people can dis-
agree on the same intelligence analysis.
What we do say is that it is the opportunity for espionage that
your committee essentially reported on, that Mr. Trulock reported
on, that was of extraordinary importance to the country, is the op-
portunityit is the opportunity for further mischief that we are
concerned about. We think the one way that you get that changed
is by streamlining this agency and making it very, very functional
and reporting directly to the Secretary. That is what we think.
Mr. COX. My time is expired. I wonder if I might just ask for a
brief update on very important issue in your report. In the Presi-
dents Foreign Intelligence Advisory Board report, you state that
remote dial-up access to unclassified networks without any moni-
toring by the lab is possible at least as of the date of your report.
Is that still possible? Do we still have problems with
Mr. RUDMAN. I have someone here who is an expert in that area
from the Intelligence Community. If you will give me 30 seconds,
I will answer your question.
We cannot give you any more information that is more current
than 13 days ago; 13 days ago that statement stands. Possibly
something has done to change it. That was true 13 days ago.
Mr. COX. With your permission I would ask the Secretary then
to respond.
Mr. RICHARDSON. I think it applies to unclassified systems only.
Mr. COX. Yes. We are talking about the unclassified network,
such as the network to which the millions of lines of nuclear codes
were transferred.
Mr. RICHARDSON. I understand that there is a firewall up, and
the only thing that is accessible is the Web pages and the unclassi-
fied provisions. So there is a firewall.
Mr. COX. Has that changed in the last 13 days?
Mr. RICHARDSON. Yes. In the last month.
Mr. COX. I just wonder if you are talking about before or after
the 13 days ago date that Mr. Rudman is talking about.
Mr. RUDMAN. Congressman, let me just sayand we are in an
open session, and you know this isPFIAB deals with these issues
all the time. This is something I know something about. I dont
take any confidence whatsoever from the statement I just heard,
that the Secretary may believe it, but I suggest he talk to some ex-
39
perts in cyberpenetration. These firewalls are penetrated all the

time, and that is all I want to say. But it has got to be looked into
very closely. And quite frankly, we have people that we have talked
to that are the world experts on this issue, and I expect you could
talk to them, too. I am sure the Secretary will.
I just dont think we ought to give people assurances about
things we are not certain of. This did not happen on Bill Richard-
sons watch. He is not responsible for what happened, he is trying
to fix it, and I dont think he ought to try to defend something that
he cant defend. That is my honest opinion. I will tell you what I
think here.
Mr. RICHARDSON. I am not trying to defend it. You asked me a
question whether firewalls have been set up, and I answered yes.
Are they perfect in the unclassified area? No. The firewalls that
deal with security and classified information, we are going through
a stand-down right now to determine that. My people tell me that
they are. Again, we need time to do this right. And that is exactly
what we are doing.
Mr. COX. Mr. Chairman, I thank you, and I wish again to thank
both of our witnesses, which I should have done at the outset of
my time, for the energy and work that have you been in here, and
notwithstanding what I take to be a little defensiveness on the part
of the Secretary, we do recognize the work that you have done, and
I publicly recognize it and wish to do so here again today.
And insofar as Mr. Curran is concerned, I think it is pretty clear
that what he was telling our committee he was telling us in real
time at the end of 1998, and what he has said subsequently is that
that situation has been changed, and I think it is your point here
today that you are trying to accelerate that process where we were
at the end of 1998, when our committee was investigating this, was
that we were off in the year 2000. And you hope now you can accel-
erate that. And obviously the purpose of this oversight is to help
accelerate that process, and we take very seriously the expressions
of Senator Rudman that we shouldnt have to wait for a newspaper
account or media reports or what have you in order to do our job
up here, and the extent of our job here today is to continue to focus
white heat on this. That is what we intend to do. I thank the chair-
man.
Mr. UPTON. Mr. Burr.
Mr. BURR. Thank you, Mr. Chairman. Mr. Secretary you have
used some words over and over again. One of them is polygraph.
let me just ask you, the Washington Post yesterday reported that
the first DOE employees to be polygraphed under the new pro-
gram, and the only ones so far, are 57 of the 60 members of the
counterintelligence staff. Is that an accurate report in the Wash-
ington Post?
Mr. RICHARDSON. Yes, because we are the source of that. I think
it is close to 60 now.
Mr. BURR. Let me ask you, do you know Stu Nagurka? Am I cor-
rect?
Mr. RICHARDSON. Yeah. He is my press Secretary.
Mr. BURR. Is he here today?
Mr. RICHARDSON. I dont see him.
40
Mr. BURR. Let me read a statement that he made on May 30 to

the Sacramento Bee. The Energy Department spokesperson said or-
ders have gone out for a large number of Department scientists to
be subjected to periodic lie detector tests. I know they have begun,
Nagurka said.
Is that an inaccurate statement on his part that, in fact, poly
graphs had begun with Department scientists?
Mr. RICHARDSON. His statement is accurate. He said order.
Mr. BURR. No, his statement says, I know they have begun. They
have gone out, I know they have begun.
Mr. RICHARDSON. The orders have begun.
Congressman, let me just tell you about poly graphs, because this
was a very controversial provision that I approved amidst great op-
position within the labs, within the bureaucracy, within the govern-
ment, within civil liberties groups. If we are going to do poly
graphsand by the way, they began in April, I believe the 27th.
When we have polygraphs, you have got to be careful how you do
them. They have to be based on national security.
Mr. BURR. So all scientists are not going to go through a poly-
graph.
Mr. RICHARDSON. That is correct.
Mr. BURR. Let me ask you about the contract, if I could. You
stated earlier that you would consider the University of California
contract based upon the facts. And I would like to look at some of
those facts. Does the contract as written currently require the Uni-
versity of California to carry out the security directives that are set
by the Department of Energy?
Mr. RICHARDSON. Yes. All our contracts haveensure that secu-
rity and other aspects are adhered to, yes.
Mr. BURR. Did you in 1995 in a letter to Secretary OLeary ask
her to open up the bidding process so that people could bid against
the University of California for the Los Alamos contract?
Mr. RICHARDSON. Yes, I did.
Mr. BURR. To your knowledge, has the university ever been pe-
nalized through a fee deduction based upon their annual evaluation
rating that is done by the Department of Energy?
Mr. RICHARDSON. The policy now is that the subcontractor is pe-
nalized, and I believe at the time when I was a member of this
committee, which has been my policy, which is that there should
be open competition for all contracts.
Mr. BURR. In fact, is there not an annual evaluation rating that
is done by the Department of Energy on all their contractors?
Mr. RICHARDSON. No, not on every contract. For some contracts
the University of California contractthere is at least a yearly
component, yes.
Mr. BURR. In fact, one of those components is an evaluation per-
formance on safeguards and security. And one was done last year
on the University of California where they received a rating of ex-
cellent by the Department of Energy. Given what you know today,
did somebody at the Department of Energy make an inaccurate
evaluation?
Mr. RICHARDSON. I dont know about that test. I do know
that
41
Mr. BURR. These are the ratings that DOE gives their contrac-
tors based upon their performance.
Mr. RICHARDSON. I dont know if that is accurate. I have never
heard of that excellent rating. When I recently conducted very ex-
tensive security reviews in Los Alamos, which is the University of
California, main contractee, did not receive an excellent rating. In
fact, it was marginal. It was marginal. So I dont think your report
is up to date.
Mr. BURR. I would challenge you to go back and look at the inter-
nal evaluation done for the purposes of whether there was a deduc-
tion of their fee based upon their lack to reach a good or above rat-
ing.
Let me ask you again, given what you know today, would you
considernot asking you for a definitive answerwould you con-
sider a cancellation in their contract?
Mr. RICHARDSON. I cant give you that answer. I will make a
judgment at the end of the term, and it is going to be based on
whether they have performed well on security, whether they have
achieved their scientific goal.
Mr. BURR. Do you believe they have fulfilled their security re-
quirements based on
Mr. RICHARDSON. Congressman, I dont want you to blame the
University of California for the security problem. You should blame
the Department of Energy personnel. You should blame Los Ala-
mos. It is a collective blame. To set up the University of California
as a straw man I dont think makes sense. Now, that doesnt mean
that we shouldnt look at every contract, as I have, and I have gen-
erally recompeted almost every one, despite a lot of political pres-
sure to the contrary. When the University of California contract
comes upand it is not up for a year, year and a half
Mr. BURR. It is not up until 2002, and with all due respect to
you, I certainly appreciate the effort that you have made. Part of
my questions are to distinguishif I could, Mr. Chairmanare to
distinguish whose responsibility it is. We have tended to watch a
process that I think Senator Rudmans committee has said that
there is a tremendous lack of confidence that exists with the cur-
rent DOE employees to carry out any internal revamping of the se-
curity measures at these facilities. Clearly that is substantiated if
the DOE internal performance rating was an excellent on security
and
Mr. RICHARDSON. Congressman, that was before I came, and I
dont know who did that. That is one of the reasons we need to re-
form the Department, because you get these ratings that are obvi-
ously wrong. That is what I want to change.
Mr. BURR. So your statement would be then, it is the Depart-
ment of Energys responsibility, it is not the University of Cali-
fornia?
Mr. RICHARDSON. The Department of Energy contracts with the
University of California. It should be a collective responsibility. It
is not just one or the other. The University of California needs to
do better on security. That is painfully evident. I am not taking
that out. I am also saying to you, which maybe you are having dif-
ficulty accepting, is that we have made dramatic progress on secu-
rity and counterintelligence with the labs, with the University of
42
California. The University of California has just undertaken a re-

view of their own. Nobody is disputing that there have been secu-
rity lapses. We are trying to fix it.
Mr. BURR. I appreciate the chairmans indulgence and would,
just for the record, make the Secretary aware that the current con-
tract runs out in 2002, but based upon the requirements, if the gov-
ernment were to open the bid process, the Secretary would have to
notify the university by the end of next year. And my question
didnt deal with the whether we would open the bid process, it
dealt about would the Secretary, based upon his findings, consider
cancellation of the current contract, which is certainly within the
purview of the Secretary. And I yield back.
Chairman BLILEY. The gentleman from Pennsylvania, Mr. Green-
wood.
Mr. GREENWOOD. Mr. Chairman, Secretary Richardson, I think
my constituents would be a little bit surprised had they been aware
of the fact that there were so many thousands of visitors going
through these weapon laboratories. I think they would even be a
little more surprised to learn that a lot of them were foreign visi-
tors; might be shocked to learn that those foreign visitors were
from countries like China. They would probably be knocked over if
they knew that some of those Chinese visitors were intelligence of-
ficers, and they just wouldnt believe it at all if we told them that
some of them were known spies. But all that seems to have been
the case.
It is my understanding that the Departments Inspector General
reviewed the last two Department status reports to the President
of nuclear security, one in 1997 and one in February of this year.
And the IG recommended that the security risk posed by the for-
eign visitors program be upgraded in the reports and flagged for
the President. But DOE, as my staff tells me, didnt do that, and
at least once under your tenure that was the case.
Can you help us understand why the Department did not concur
with the IGs recommendations for flagging this issue for the Presi-
dent?
Mr. RICHARDSON. Well, I dont know where your staff is getting
this information. I do not believe I ever received any report like
that. I can tell you that we have dramatically upgraded the foreign
visitors program. This was part of Presidents Clintons Presi-
dential Decision Directive 61.
Mr. GREENWOOD. I am toldif I may interruptthe answer to
your rhetorical question was from the Inspector General in the De-
partment of Energy.
Mr. RICHARDSON. Well, you know, this is news to me. I believe
very strongly that we have upgraded the security of this program.
You know, I can say to you that the majority of the Congress has
agreed with me, to keep the foreign visitors program. Some of the
measures that are in the armed services bills such as moratoriums,
are a bad idea and other very strong controls over the foreign visi-
tors programs are good, and we will go further. But I am not
aware of the inspector general saying anything to me or giving me
a report about flagging the President on anything.
[The following was received for the record:]
43
As indicated by the actual Accountability Report excerpted below, the President
has been fully informed of counterintelligence matters at the Department and had
as a result, on February 11, 1998, issued a national security directive (PDD-61) to
the Depamment to make improvements in this area. As the Report also indicates,
the Department was reporting its progress in implementing these improvements as
an emerging issue, including, as stated in the Report, the preparation and submis-
sion of an action plan to the Presidents National Security Advisor. This action plan
was submitted to the White House on November 13, 1998. Although the Inspector
General criticized the Department for not further elevating these issues in the Ac-
countability Report, the Department believed that these counterintelligence matters
had already been reported to the President through other communications, as evi-
denced by the Presidents issuance of PDD-61. Consequently, the Department did
not agree with the Inspector General recommendation.
44
45
46
47
48
49
50
51
Mr. GREENWOOD. Okay. The Rudman report also mentioned that

there was an incident where there was an illegal wiretap that was
discovered in the lab, and that the responsible employee confessed,
but was not prosecuted. If this question hasnt been asked in my
absence, and I apologize if it has, was the tap discovered in a clas-
sified area of the lab?
Mr. RICHARDSON. We have no knowledge whatsoever about this
report. And I directed my counterintelligence people to find out
about it, and they gave me this answer, too.
I will say to you that there was athere was a nonespionage-
related incident that was presented by the FBI to the Special U.S.
Assistant Attorney for Prosecutorial Action, a nonespionage-related
incident. The special assistant declined to prosecute. The DOE then
pursued prosecution under New Mexico State law as the act vio-
lated the New Mexico Law Code. The subject of the investigation
pled guilty in court, was sentenced to a fine and probation. And the
Department of Energy took administrative action against the sub-
ject that included the suspension of his Q clearance, reassigned
him to an area that required no classified access. Based on the re-
assignment action, the subject was forced to accept an estimated
$30,000 reduction in annual salary. So this was a nonespionage in-
cident.
Mr. GREENWOOD. I think we are all a little curious up here.
What sort of information was which employee trying to gain
through a wiretap? Is this a romantic issue?
Mr. RICHARDSON. I dont know.
Mr. GREENWOOD. Senator Rudman, did you want to comment on
either?
Mr. RUDMAN. I would not comment on either one of them. They
are both law enforcement matters. We illustrated them only to
show the incredible things that were happening in these labora-
tories long before the Secretary became Secretary, and for which no
apparent tough measures were taken.
Now, if I understand it correctly, one of the reasons we cited it
is this individualand, again, this is before this current adminis-
trationwas reassigned. I think I am correct about that, he was
reassigned, but his security clearance was taken. I dont under-
stand how anybody who attempts to wiretap a government facility
isnt fired on the spot and just shipped out. It would happen in any
private company I know.
But there was such a permissiveness in this place about every-
thing, and we illustrated that. There were other examples, but not
in open session can they be talked about.
I mean, again, why the Secretary and his staff defend those kind
of actions, if they are, is beyond me. They didnt do them.
Maybe there is something in the water over there. Maybe once
you work in the Department of Energy, you defend it to the death,
even if the people 10 years before were damn fools, as many of
them were. I mean, this was foolishness. This person should have
been fired.
Your constituents, told that somebody wiretapped and suddenly
got their clearance jerked, but went back to work and got their
pension and health care, they wouldnt believe it. They would get
52
fired from their job from wherever you are from in Pennsylvania
with alacrity.
Mr. RICHARDSON. Congressman, I guess I just have a different
way of facing things. If there is a problem, I try to fix it. I dont
like to say, well, I wasnt here.
I gave you an answer, and the answer was the facts as I know
them. I am not trying to defend that. I am not saying it was right.
But, you know, to say, look, this was on the Republican watch, and,
you know, there is a lot of incidents on the Republican watch, on
the Democratic watch, it is a pervasive problemwe are talking
about 20 years of problemsyou asked me a question, and I am
answering it. I am not defending anything, but I just have prob-
lems with the perception that just because it didnt happen on my
watch I shouldnt try to fix it.
Mr. GREENWOOD. Well, perhapsit is my understanding, Mr.
Secretary, thatI need to yield back nowbut that you are not
aware of the details of this particular incident, and I asked you
what information he was obtaining or she was obtaining through
this illegal wiretap. Would you supply this committee with the an-
swer to that question?
Mr. RICHARDSON. Either myself or the FBI would do that for you.
Mr. GREENWOOD. I appreciate it. Thank you very much.
On April 28,1997, a male Los Alamos National Laboratory (LANL) employee ad-
mitted to rewiring the telephone and recording telephone conversations of a female
LANL employee while at work. He allegedly had an affair with the female employee
and recorded the conversations for personal reasons.
On May 7, 1997, the facts of the case were presented to Assistant United States
Attorney (AUSA) David N. Williams. AUSA Williams declined federal prosecution
of this matter due to the personal nature of the recordings and the fact that the
female employee did not work in a classified area or have access to classified infor-
mation at the time this incident occurred.
Mr. GREENWOOD. Thank you, Mr. Chairman.
Mr. UPTON. The gentleman from Illinois, Mr. Shimkus.
Mr. SHIMKUS. Thank you, Mr. Chairman.
Senator, first for you, I really appreciated that stack of docu-
ments on reports. What do we need to do so this report is not just
another one that gets thrown in the stacks and then 2 years from
now, instead ofwhat did you have six, six reports, or eight? I
cant remember how many, but then you have seven or nine that
you just say, and here is a report
Mr. RUDMAN. There are actually 100.
Mr. SHIMKUS. [continuing] from June 1999 listing these problems
again.
Mr. RUDMAN. What has to be done?
Mr. SHIMKUS. Yes, sir.
Mr. RUDMAN. I would say several things. No. 1, I hope whoever
is elected Presidents in the year 2000 selects a Secretary of Energy
that has some national security background and some, hopefully,
technical background. I think it is a very important place.
Obviously, Secretary Richardson certainly has substantial na-
tional security background, and a lot of technical background from
serving on this committee.
No. 2, I would hope that the Congress will adopt some sort of a
major reorganization and streamline this agency.
53
No. 3, I hope the oversight, both within the agency and the Con-
gress, is vigorous; and I mean vigorous. That is what I believe.
Mr. SHIMKUS. Thank you, Senator.
In part of your report, some of the DOE complex would not fall
within the new entity that you proposed. Do you think that those
other areas and their security concerns could fall under the pro-
posed security czar as the Secretary has mentioned? Or how do
youhow do we deal with those elements?
Mr. RUDMAN. This morning before the Senate, we had quite a
discussion about that. I dont have a problem at all with some
modifications of our proposal in terms of staffing of the semi-
autonomous agency. Certainly the Secretary makes a good case
that security probably belongs up at the top with reporting to him,
setting policy, with some adjunct to that office located in the new
Department or agency. I dont have a problem with that at all.
Counterintelligence, I think we still disagree. I think he can have
counterintelligence policy at the top level. I dont disagree with
that. You have to have strong counterintelligence down within the
unit, and I dont think we really disagree with that. So there is a
lot of agreement here.
The fundamental disagreement we have seems to be that the
Secretary is having a hard time accepting an agency or an adminis-
tration within a Department, which is fairly common at DOE and
at Commerce and a couple of other places, I am told. But, you
know, you will have to work that out with the Secretary.
I want to point out here that the PFIAB, this is an unusual role
for the PFIAB. We dont have any great pride of authorship. We
try to do a public service. It is up to Members of Congress, mem-
bers of the appropriate committees who do this all the time with
your staffs and the people on the Senate side, work with the Sec-
retary and get this done.
But I surely hope that when you get it done, you dont leave it
so that some future Secretary or some future Director of Security
or some future Director of Counterintelligence cannot realize what
everybody went through in 1998 and 1999 on this issue, which, by
the way, is what normally happens in government. It is the next
crisis that people pay attention to.
Mr. SHIMKUS. Well, I appreciate those comments, and I think
that is reiterated in those other reports that you addressed; a new
administration coming in in 18 months and another new wave.
I am also really struck by the testimony and your report on cor-
porate culture. That is what we are really getting at, for lack of a
better word. The corporate culture at the Department of Energy,
especially on the issue of security, seems to be, based on a report
ofand I want to choose my words carefullyreally a failure, and
your report recommends a way to break out of that corporate cul-
ture. I guess you said it great in your opening comments, the old
saying we need a new wheel, and I would hope that this committee
in its oversight, and if we can continue working with the Secretary
and as we continue to move forward, keep this close at hand so
that we can help rebuild the wheel for national securitys sake.
With that, I will yield back my time.
Mr. UPTON. Thank you.
Mr. Stearns.
54
Mr. STEARNS. I thank the chairman.

In all deference to you, Senator Rudman, I think any CEO of any
Fortune 500 company could come in and straighten this out in 90
days or 6 months. It would not take 3 years to do this.
Mr. RUDMAN. Congressman, I am sorry, but I cannot hear. It is
probably me and not you.
Mr. STEARNS. Okay. I am just saying, Senator Rudman, I dont
think it would take 3 years to straighten this out, like you indi-
cated. I think any CEO of any middle management company could
do it in 90 days to 6 months. I think the taxpayers just wont tol-
erate a 3-year process on this.
The Secretary of Energy had indicated earlier that he didnt
think the Department of Energy, or in this case the Department at
Los Alamos, was top-heavy. But yesterdays Wall Street Journal
talked about the bloated bureaucracy, indicating that in 1979 there
were sort of 4 major departments with 10 layers and 56 senior ex-
ecutives, and then last year they exploded to 18 layers and 143
senior executives.
I mean, obviously I think most of us think there is a lot of top-
heavy bureaucracy in that area, and I hope the Secretary will look
at it more carefully.
My second concern is, Mr. Secretary, you indicated that you
talked aboutyou have ordered a 2-day complete stand-down in
the labs to renew instructions for staff about security practices.
Now, obviously, this costs a lot of money to taxpayers.
When we try to understand what this 2-day complete stand-down
is, we understand that basically all it is is employees are told to
read the Rudman report, to attend to some old replayed videos on
security in the afternoon. We are told that virtually no manager at-
tended these sessions and that employee attendance for the after-
noon session was roughly 20 percent. I think this whole idea of this
2-day complete stand-down doesnt seem to be that effective.
And this is a question for Senator Rudman. Back in April, the
Secretary of Energy ordered the computer systems at the three nu-
clear weapons labs shut down for 2 weeks in April in order to brief
all the employees on it and to drive home the importance of com-
puter security. In response to the release of your report last week,
you ordered complete shutdowns, as I mentioned earlier, for 2 days.
I mean, based upon your report and your inspection, do you think
there is any value to the Secretarys 2-week, so to speak, lab shut-
down, and what do you think of this whole 2-day complete stand-
down he did just recently?
Mr. RUDMAN. I am not sure I am qualified to answer the ques-
tion.
Mr. STEARNS. Did you find any impact from this great 2-week
shutdown that he ordered in April? Did you find any segment of
this influencing the Department at all?
Mr. RUDMAN. I am not sure that I can answer that question, be-
cause I want to be honest and fair here, and I dont want to answer
about things that I dont know.
You are asking for a factual answer. I have a lot of opinions, but
lately I dont have too many facts. You know, there is an old say-
ing, I am entitled to my own opinions. I am not entitled to my own
facts. So I dont think I can answer the question.
55
But let me just say this to you: I think the Secretary, and I know
that he will and his staff, now check and see if what you just said
was accurate. If this stand-down was a mock exercise, then there
ought to be hell to pay for it, frankly.
Mr. STEARNS. I would think so.
Mr. RUDMAN. That is all I would say.
Mr. STEARNS. Did you see any attitude change in the employees?
I dont think you saw any attitude change as a result of this 2
weeks in April, big shutdown to discuss security and talk about se-
curity stand-down. I mean, you didnt see any attitude changes at
all?
Mr. RUDMAN. Well, to answer your question, we met with a num-
ber of employees, some of whom are at levels quite high, others
middle, and I would say that they were very concerned about the
perception that they were doing a terrible job at security; that they
had an arrogance and a culture that was unacceptable. I think
there was a lot of concern about that. I think some of that came
out of that stand-down.
Now, I dont know much else about it because we have not done
a postaudit of what the Secretary has done, so I dont want to an-
swer that question because it will be unfair.
Mr. STEARNS. But the fact that no managers attended this recent
stand-down session and the employee attendance for the afternoon
session was roughly 20 percent I think says it all.
Now, Senator Rudman
Mr. RICHARDSON. Congressman, am I asked to respond to totally
unfounded allegations?
Mr. STEARNS. Well, let me just continue.
Mr. RICHARDSON. On a stand-down that isnt even over and you
have the results, I find that very curious.
Mr. STEARNS. Mr. Chairman, can I have my time? I would like
to continue.
Mr. RICHARDSON. The stand-down is not even over yet, and you
have its conclusions. I find that strikingly interesting.
Mr. STEARNS. I have a question for Senator Rudman.
Mr. UPTON. The gentlemans time has expired. If we can just get
an answer, we are going to have enough time for another round of
questions.
Mr. STEARNS. Okay. Can I ask this last question, Mr. Chairman,
ask unanimous consent?
Mr. UPTON. He can respond to the question that you asked.
Mr. STEARNS. I mean, this is a question for Senator Rudman.
Mr. UPTON. Go ahead.
Mr. STEARNS. Okay. Mr. Berger, the national security advisor,
was notified in 1996 about severe security problems in the Depart-
ment of Energy, and the President was notified in 1997. Shouldnt
the administration bear some responsibility and criticism for secu-
rity lapses in regard to this Chinese espionage?
I know on the Senate side you indicated that it was Congress
fault, but I mean shouldnt the President take some responsibility?
Mr. RUDMAN. Well, what I said, I said that there was enough
fault to go around, including the Congress, including the President,
several Presidents, and several Secretaries. I got a note from some-
one who didnt like that, but that is the way I feel.
56
Let me answer your question from my report. If you look at page

37 of our report, you will find that we say the following: Although
the national security advisor was briefed on counterintelligence
concerns by DOE officials in April 1996that is the bottom of page
37we are not convinced that the briefing provided a sufficient
basis to require initiation of a broad Presidential directive at that
time. We are convinced, however, that the July 1997 briefing,
which we are persuaded was much more comprehensive, was suffi-
cient to warrant aggressive White House action. We believe that
while the resulting PDD was developed and issued within the cus-
tomary amount of time, these issues had such national security
gravity that it should have been handled with more dispatch.
That is a very direct statement. Told the President of that last
Monday. That is kind of a good news, bad news story. The good
news is that the Presidential Decision Directive that they issued to
the Department of Energy was far-reaching, well thought out, and
formulated by the FBI, the CIA and the Department. That was the
good news.
The bad news is that for a long time nobody paid any attention
to it.
Mr. UPTON. The gentleman from Maryland, Mr. Ehrlich.
Mr. EHRLICH. Senator, I love your style.
Mr. Secretary, I like your style, too. I know you have a tough po-
sition. I think a lot of us who have been in government can have
some sympathy with respect to where you are right now.
Let me ask you, particularly with respect to the issue of poly-
graphs, my friend from North Carolina had begun a line of ques-
tioning, which I am an attorney, but I am not an expert in poly-
graphs, and I think he was referring to the observation made in
yesterdays papers that not a single scientist had yet been sub-
jected to polygraphs, University of California scientists.
Let me ask you, or whomever is the appropriate person on your
staff, what the status of the law is with respect to polygraph test-
ing.
Now, you made an earlier statement that the issue of probable
cause comes into play as to the identities of those who are subject
to polygraph, and I understand this is a legal land mine with all
sorts of potential lawsuits and the whole 9 yards. Can you tell us
right now what the present status is with respect to the law, how
it applies to contractual employees, let alone Department employ-
ees, and particularly in the context of the observation that someone
has made that it would take the initial round of polygraphsfor
those who are supposed to take it, it would take 4 years? I know
that is a wide-ranging, multifaceted question. Let me throw it open
to you and ask you to respond to all of those questions.
Mr. RICHARDSON. Congressman, on March 17 of this year, I
signed notice DOE 472.2, use of polygraph examination. This is
what it does: It identifies those DOE programs subject to the poly-
graph and the general provisions for conducting polygraph exams
of DOE Federal employees. Since its issuance, the DOE has
polygraphed many Federal employees who are covered by the no-
tice, as well as some of its contractors who have volunteered to be
polygraphed.
57
We are at the time undertaking a rulemaking process, and I

havent waited for the rulemaking process. I have gone forward
with the policy initiative of doing polygraphs.
We are undertaking a rulemaking process which will expand
DOEs counterintelligence polygraph program to include its con-
tractor employees as well Federal employees.
Now, the polygraphs are based on counterintelligence, on espio-
nage, on national security grounds. They are carefully drawn. They
dont involve life-style.
This is, as you know, a scientifically questioned procedure. They
can refuse, but they would be removed from sensitive work, and
there would be no need for probable cause.
Mr. EHRLICH. Let me interject, if I may, just for a second. You
had said with respect to contractual employees, at this point in
time the ones who have volunteered have been polygraphed. That
leads me to believe that others have not volunteered.
Is it your opinion that you have the authority with respect to
those contractual employees who have not volunteered that if they
are asked and decide not to take the polygraph, that they can be
removed from any sensitive areas?
Mr. RICHARDSON. Yes, I would have the authorityonce I get the
rulemaking, and we are going to get it, I would have the authority
to polygraph the contractors, too.
Mr. EHRLICH. Do you need any statutory changes in the law that
we need to know about to implement what you believe needs to be
done with respect to polygraphs generally?
Mr. RICHARDSON. Congressman, I dont think so, because I think
this rulemaking is imminent. I think I have the existing authority.
The tough decision was doing polygraphs. Only two other agen-
cies do it: the National Security Agency and the CIA.
Mr. EHRLICH. Thanks. I appreciate it. I yield back.
Mr. Klink.
Mr. KLINK. Thank you, Mr. Chairman, for allowing me to go
first. I am going to try to get to the floor.
First of all, Mr. Secretary, I just want to follow up on one ques-
tion on Mr. Coxs line of questioning. Currently can employees still
download classified information
Mr. RICHARDSON. No.
Mr. KLINK. [continuing] into their own disks? Can they download
classified information currently onto their own disks, and then take
it out of the laboratory?
Mr. RICHARDSON. They cannot take them out of the labs. They
cannot download on classified disks.
Mr. KLINK. I am sorry. I dont understand. They can what?
Mr. RICHARDSON. They cannot download on classified disks, and
they cannot take the disks home.
Mr. KLINK. How are you to enforce them not taking that disk
home?
Mr. RICHARDSON. We have a two-person rule. We have what is
called a two-person rule, and intrusion devices. The two-person
rule involves two individuals giving approval whenever you trans-
fer classified to unclassified.
58
Mr. KLINK. So how would you be made awarewithout giving up

anything secret, give us an idea of how you would be made aware
that they were downloading something that was classified.
Mr. RICHARDSON. I cant do that.
Mr. KLINK. But there is a way?
Mr. RICHARDSON. There is a way. I think we have to go into clas-
sified session.
Mr. KLINK. I understand. But you are assuring me that there is
a way that you would know that something classified was being
downloaded?
Mr. KLINK. We dont have to go any further than that, Mr. Sec-
retary. I appreciate that.
Senator Rudman, I dont want you to get angry with me with
this question, but it is something that needs to be asked, and I
have been struggling with it myself. Please dont be insulted. One
of the things that has bothered me about the panel that you put
together to look at these enormous security problems that surfaced
at the weapons labs was that you appointed Dr. Sidney Drell, who
I dont know, from the University of California, who has the re-
sponsibility of those same laboratories.
Now, he may be a wonderful person, may be an honorable per-
son, but the question is are we not putting somebody in charge of
the investigation who is going to be asked to rat out his employer
to the President of the United States? That is a very uncomfortable
position to ask Dr. Drell to be in. Can you explain that thought
process to us?
Mr. RUDMAN. Yes. I thought it was, and that is why I told Sid
Drell, that I thought this service was so important to this country
that I would like him to resign from his position at the University
of California before going on this panel. He did so.
Mr. KLINK. So you didnt see any problems at all with the
Mr. RUDMAN. Dr. Drell is a man of such unquestioned integrity,
but even with that we felt that staying on the UC advisory board
would have a terrible appearance, and so we just said, Sid, we need
you on this panel.
I had a limited group to pick from. The PFIAB was only about
14 people. He is a world-renowned expert and could answer ques-
tions that no one else could, and he decided, after many years, that
he would resign.
I might also point out to you that we had another extraordinary
person on there named Lou Allen, who you may know, former Chief
of Staff of the United States Air Force, former director of the jet
propulsion lab, he is on the Sandia board, and thus we felt we
could not have him on the panel at all. But we did not have a prob-
lem with Dr. Drell, but I did require that resignation, and he did
it.
Mr. KLINK. Thank you. You have cleared that up for us.
Now, did your panel review the ramifications of shifting the con-
trolagain, I want to get back to environment, safety and health
operations. If you are shifting that function away from the Office
of Environmental Management to this new autonomous Nuclear
Security Administration, what impact would it have on national
59
laboratories and facilities like Oak Ridge or Savannah River? Is

this something that you looked at?
Mr. RUDMAN. Well, I dont think we are doing that. I dont think
we are doing that at all.
If you are looking at the chart on page 50, I believe, or 51, we
have everything in place, and we leave the Secretary full authority
to interface those other parts of his Department, such as environ-
ment, health, with the new Agency for Nuclear Stewardship.
We put nonproliferation and arms control, fissile material and
naval reactors in there, and these plants, but those other parts of
the agency, huge, particularly environmental, we dont touch those.
Mr. KLINK. Then who would be responsible for environment,
safety and health operations at the sites that you have listed?
Mr. RUDMAN. Within the Agency for Nuclear Stewardship, it
would be the Under Secretary, as it should be.
I mean, you cant have someoneCongressman Klink, let me tell
you something. You know, from being out in the private world that
I am in, you know, I see people who head up a corporation, and
one of their division managers heads up a division with 10,000 peo-
ple in that division. If anything goes wrong in that division, wheth-
er it is production, cost, embezzlement, environment, OSHA, what-
ever, that person is responsible, and they are gone if something
happens they should have prevented.
That is what is wrong here; there is nobody responsible. I mean,
you know, if you want to put the person from the environmental
part and the health part and all the other parts and say, well, they
are going to have jurisdiction over that part of it, then you are
going to go back to where we started.
Name a strong leader and make that leader responsible. It works
in the private sector. It will work here. It works at NASA. It works
as NOAA. It works at DARPA, and it works at NSA.
Mr. KLINK. So, Senator, what you are saying is you are setting
up a parallel structure, one within DOE and one within this auton-
omous?
Mr. RUDMAN. The difference is it is just athis is a division of
DOE, if you will, a part of it; like NSA is a part of the Department
of Defense.
Obviously, the Secretary will have at his level a much bigger en-
vironmental organization than they will have, but they will have
to have people who look after environmental issues.
Mr. KLINK. What if there is a disagreement then between what
DOE thinks and what this semiautonomous or this autonomous
group thinks?
Mr. RUDMAN. I have been trying to figure that out now for 72
hours because I like Bill Richardson, and we have talked. We have
had discussions. But he has a block that he has placed someplace
that says, I will do this all with some changes, but dont call it an
agency, dont call it an administration; just dont call it anything.
We believe that to insulate this, not isolate it but to insulate
this, from the rest of the bureaucracy, which we have plenty of evi-
dence has not contributed to the solution but is part of the prob-
lem, we want this to be called an agency or administration respon-
sible directly to him.
60
Mr. KLINK. If there is a different interpretation between what

DOE thinks how something should be done or interpreted and this
autonomous agency thinks something differently, who overrides
whom?
Mr. RUDMAN. The Secretary is in charge. The statutory language
I read here this morning. There is no question. Let me give an ex-
ample. The National Security Agency located out in Maryland, sub-
urban Maryland, an extraordinarily important agency, does very
important things. They have a Director who happens to be a mili-
tary officer. Anything that the Secretary of Defense is unhappy
with at NSA, it goes through the chain of command; it is fixed.
True also of DARPA, true of NOAA and Commerce. The Secretary,
under our reorganization plan, if people will just read it, not just
look at the chart, says to the Secretary, you are in charge of these
weapons programs ultimately, and this is the fellow or the woman
who is going to run them. It is in this box down here. We call it
an agency, because we are worried about what happens after this
current group leaves. I am very concerned about that.
Why? Because we looked at transitions over the last 20 years,
and you wouldnt believe what we found.
Mr. KLINK. Thank you for being so forthright.
Mr. Secretary, I thank you also.
Mr. RICHARDSON. Congressman, I hope you will let me use 1
minute or so to respond to an unsubstantiated charge which Con-
gressman Stearns didnt have the courtesy of letting me respond to.
To say that the stand-down of 2 weeks ago that we ordered be-
cause of the security concerns raised by so many in cybersecurity
that you raised, and to say that the 2-day stand-down that we have
done, where we are training employees, where we are looking at all
the cybersecurity changes, where we are testing, putting ourselves
under scrutiny, is an exercise that is not worth doing, and 20 per-
cent of the employeesof the managers have not attended is a to-
tally baseless charge.
It is now in New Mexico 1:30, and I find Congressman Stearns
results already tabulated before we have finished the exercise rath-
er skillful manipulation.
So these are necessary exercises. I think that to do a stand-down
at a national laboratory, a nuclear lab, is one of the most drastic
actions you can take. You are actually stopping work to make sure
that counterintelligence security are being observed. That is never
happened before.
I did it for 2 weeks. I didnt tell them when I would stop it until
I was satisfied. I am doing it now for 2 days, after reading further
concerns that some in the Rudman Commission and others in the
Congress had. And I may do this again, but to say this is not a
worthy exercise when you are asking me to test our labs, to go out
and make them uncomfortable, which this does, is something that
I am rather flabbergasted at this claim that this is an exercise that
we shouldnt do.
Mr. UPTON. The time has expired.
Gentlemen, thank you, again, for coming up. I know that mem-
bers of the committee are going to have additional questions later
for you. I know that Mr. Klink and I are going to be cooperating
and having probably additional hearings on this topic as well.
61
Mr. MARKEY. Mr. Chairman, I apologize. I was just sitting over

here. I thought you were going to go a second round.
Mr. UPTON. We are now starting a second round. Actually, I
yielded to Mr. Klink to start the second round because he has an
amendment on the floor. I am going to just take a minute or 2. I
am going to go yield to Mr. Dingell. We will come back to Mr.
Shimkus, and then we will take you.
In any case, I have one question that remains unanswered, as I
listened to the many questions that are here now, and that is the
banning of foreign visitors. We had an amendment on the floor a
couple of weeks ago offered by our colleague Jim Ryun from Kan-
sas. As I recall, the amendment failed, but he did ban foreign visi-
tors, with the feeling that the background checks were not in place.
Mr. SecretarySenator Rudman, as we listened to you, you indi-
cate that even if everything was taken into account, the GAO re-
ports, your study that you so carefully prepared, it would still take
a minimum of 3 years before that was going to be in place.
Mr. RUDMAN. Well, if you look at the number of people there are
to go through the clearance process, if we believe it wasnt done
properly before, if you look at the amount of polygraphing, and that
is a tough issue, I mean, I am going to predict there will be law-
suits on this issue, I think you may have long delays. You know,
it is a very tough issue with arguments on both side.
If you look at the foreign business program, which I understand
the policy for that is being promulgated, the regulations, I think,
in the next week or so to formalize it, that is what we are told, I
mean, that takes time. This is nothing you can do overnight.
I am pleased to see these efforts undergoing, but I will guarantee
you they wont all be in place when Secretary Richardson is off
cruising the Caribbean after working on it all these years and
somebody else will be there. And I dont want to sound like a bro-
ken record, but, you know, Congressman Dingell can tell you better
than I can tell you what happened in every transition of DOE going
back to 1978. We have looked at it, and things which were consid-
ered so important just dropped through the cracks. They just left.
Why? Because people had other priorities. So I would say that it
is going to take time.
Mr. UPTON. Shouldnt we have that barn door shut on some of
these foreign visitors from countries like China and other places
until these reforms are actually in place and they are working?
Mr. RUDMAN. I would err on the side of being safe rather than
the side of being sorry, given the choice, if I were running this pro-
gram.
Mr. Dingell.
Mr. DINGELL. Thank you, Mr. Chairman.
Mr. Secretary, if you have a director of a laboratory who you
think is not doing a good job, or you have an employee at the lab-
oratory that you dont think is doing a good job in terms of security
or something of that sort, what can you do about them?
Mr. RICHARDSON. I can fire them. I can fire a lab director.
Mr. DINGELL. Can you fire the employee of a contractor?
Mr. DINGELL. You can fire an employee of a contractor?
62
Mr. RICHARDSON. Yes. I have to consult with the lab director,

but, in essence, I am going to do that.
Mr. DINGELL. Supposing the lab director doesnt want them fired,
what then?
Mr. RICHARDSON. Then I fire the lab director.
Mr. DINGELL. I have always been told that Secretaries couldnt
address this problem. You are telling me that you can?
Mr. RICHARDSON. I can, and I will.
Mr. DINGELL. I am going to watch very closely, Mr. Secretary,
and I know you are not going to disappoint me, because we are
going to be quoting those remarks.
Now, Mr. Secretary, how do you expect to control this through
an independent agency?
Mr. RICHARDSON. Well, Congressman Dingell, I have indicated
my preference, which is to have an Under Secretary for Nuclear
Weapons with a security czar, and a Director of Intelligence on
these separate tracks.
Senator Rudman and I differ a little bit about the semi-
autonomous agency. I am willing to work with him and others in
the Congress, but I think the reorganization I have done with the
security czar, with this very distinguished general that has nuclear
weapons background and security background and military and
management background, I think we can do that better.
Mr. DINGELL. All right. Now, did all of the employees of the con-
tractors show up to this stand-down that you put on out there?
Mr. RICHARDSON. Well, they are all required to, yes.
Mr. DINGELL. Did they?
Mr. RICHARDSON. Well, it is not over, Mr. Chairman. It is going
to be over today at 5 p.m.
Mr. DINGELL. But, beloved friend, I assume that they were sup-
posed to show up. Did they? Did they all show up?
Mr. RICHARDSON. Well
Mr. DINGELL. Mr. Secretary, they showed or they didnt show.
Which is the case?
Mr. RICHARDSON. Well, they showed, but it is not over yet.
Mr. DINGELL. So some of them did not show?
Mr. RICHARDSON. No, no, I didnt say that.
Mr. DINGELL. Well, did they all show?
Mr. RICHARDSON. I will know at 5 p.m. Today. This is a very seri-
ous exercise.
Mr. DINGELL. If they didnt show, what will you tell this com-
mittee?
Mr. RICHARDSON. Well, anybody that did not take it seriously, I
will let you know.
Mr. DINGELL. I am informed that a large number of them did not
appear. Is that a true statement?
Mr. RICHARDSON. Well, I dont know how those reports have
come in when the exercise isnt even over.
Mr. DINGELL. Well, if they havent showed, they havent showed.
They were supposed to, though, were they not?
Mr. RICHARDSON. Well, I dont have that. That is information
that I dont have.
63
Mr. DINGELL. But if they are not showing when you have a
stand-down, they are not complying with your orders; isnt that
right?
Mr. RICHARDSON. That is correct.
Mr. DINGELL. All right. I want a full written report on this mat-
ter, and I want to have it inserted into the record because I think
that should be.
Recent inquiries indicate that participation in the Security Immersion Program
conducted at the three Nuclear Defense National Laboratories on June 21-22 was
high. The Sandia National Laboratories reports that 93% of their personnel at-
tended and the Los Alamos National Laboratory reports a 90% attendance. Those
which did not attend were on previously scheduled vacations, official travel that
could not be rescheduled, ill or excused for legitimate personal reasons, or in jobs
which must be staffed at all times. The Lawrence Livermore National Laboratory
did not keep centralized attendance records for the two days of training, but there
is no reason to believe their training was not just as well attended.
On June 24, 1999, Dr. Reis, Assistant Secretary for Defense Programs, submitted
an information memorandum to the Secretary summarizing the two-day security
stand-down training. A copy of that memorandum follows.
DEPARTMENT OF ENERGY
WASHINGTON, DC 20585
June 24, 1999
MEMORANDUM FOR THE SECRETARY
THROUGH: Ernest J. Moniz, Under Secretary
FROM: Victor H. Reis, Assistant Secretary for Defense Programs
SUBJECT: INFO MEMO: Security Immersion Program
In response to your June 16 directive, the three Nuclear Defense National Labora-
toriesLos Alamos, Lawrence Livermore, and Sandiaunderwent a two-day Secu-
rity Immersion Program standdown on June 21-22. During the standdown, all nor-
mal operations ceased and employees were required to participate in mandatory in-
tensive reviews of personal responsibility for security, counterintelligence, and
cyber-security.
Following are the missions that were accomplished by the Security Immersion
Program at the laboratories:
Personal responsibilities were reviewed with all employees to enforce and respect ef-
fective counterintelligence, security, and cyber-security procedures.
Historical problems related to the laboratories culture of resistance to effective se-
curity and counterintelligence were reviewed with all employees.
The status of implementation of previous counterintelligence, security, and cyber-se-
curity improvements underway by prior directives was reviewed with all em-
ployees.
Cyber-security actions being taken at the laboratories, especially those associated
with personal responsibility for personal computer use and e-mail, were ex-
plained to all employees.
The Zero Tolerance Security Policy was fully discussed to assure a complete under-
standing by all employees.
Senior management at all laboratories was actively involved in planning for the
Security Immersion Program at their respective sites and participated fully in the
program. With very few Director-approved exceptions, all employees and contrac-
tors, either in person or through video links, attended the full two-day sessions with
their supervisors and managers present and participating. Those employees absent
from work, off-shift, or not able to attend will be required to attend make-up ses-
sions.
In general, contents of the program sessions included:
Laboratory commitments to security
Document control
Export control
Counterintelligence
Cost of espionage
Foreign interactions, visits, assignments, travel
Cyber-security
64
Information management
The Security Immersion Program at all three laboratories was determined to be
a success. All sessions were well attended, with active question and answer periods
that went beyond scheduled times. Interest focused on understanding, guidance, and
additional information rather than rejection. Feedback from employees and man-
agers has been constructive and positive.
If you have any questions or require further information, I would be pleased to
meet with you at your convenience.
Attachments
SUMMARY OF SECURITY STANDDOWN ACTIVITIES

LOS ALAMOS NATIONAL LABORATORYJUNE 21-22, 1999
Los Alamos National Laboratory completed its two-day security standdown at the
close of business on Tuesday, June 22, 1999. All Laboratory operations, except those
necessary to maintain the safety, security, and compliance posture of the site, were
suspended so that University of California and Department of Energy (LAAO) em-
ployees and subcontractors could devote all of their attention to an intensive review
of personal responsibility for security, counterintelligence, and cybersecurity.
The two-day event featured an opening presentation by Director John Browne
with a question and answer session, presentations by guest and internal speakers
on a variety of security topics, and meetings of line organizations led by line man-
agers. The presentations were delivered in two large auditoriums (600- and 900-seat
capacity) and transmitted live on closed-circuit television to a large number of of-
fices and conference rooms around the Los Alamos site. In addition, the presen-
tations were made available through an internal web server.
The principal speakers and topics were as follows:
Opening Remarks, John Browne, Director, Los Alamos National Laboratory
Questions and Answers, William Frazer, Interim Chairman, University of Cali-
fornia, Presidents Council
Nuclear Weapons, Stephen Younger, Associate Laboratory Director for Nuclear
Weapons
Cybersecurity, Scott Larson, FBINational Infrastructure Protection Center
Espionage/Information Security, H.T. Hawkins, Director of Nonproliferation and
International Security
Strategic Counterintelligence, Rusty Capps, Center for Counterintelligence and Se-
curity Studies (former FBI)
Employee Responsibility/Accountability for Security, John Hopson, Senior Technical
Staff Member
The line organization meetings were held at the group (10-100 people) level on
both Monday and Tuesday for a total of 212 hours. The purpose of these meetings
was to obtain feedback on the presentations, develop individual group plans on ad-
dressing the five points in the Secretary of Energys Security Immersion Program,
and to engage employees in addressing any other security issues that might need
attention. A telephone help line and e-mail address were manned by Laboratory
security resource experts during the two-day standdown to assist organizations in
developing their individual plans. A total of 68 inquiries was received and responded
to by the expert assistance team during the standdown.
At the end of the second day of the standdown, group leaders met with their Divi-
sion Directors (next line management level) to begin rolling up their group-level
plans into Division-level plans. Director Browne has scheduled a meeting with all
Division Director-level management for June 24 to roll up Division-level plans to en-
sure that the points in the Secretarys Security Immersion Program have been ad-
dressed.
All of the speakers presentations were videotaped. Because some employees and
contractors could not attend all of the sessions, makeup sessions for viewing the vid-
eotapes are being scheduled. Attendance was taken during the standdown and will
also be recorded for the makeup sessions. At this time, we estimate that approxi-
mately 80% of the more than 10,000 Laboratory employees and subcontractors par-
ticipated in standdown activities. We are collecting attendance information from
Laboratory organizations to obtain a better estimate of actual participation. Makeup
sessions will be conducted until all employees and contractors have viewed these
sessions.
Questions and feedback from employees both during and subsequent to the pres-
entations and meetings has been constructive and positive.
65
June 22, 1999
Vic
We thought you would be interested in LLNLs activities in support of the Sec-
retarys two-day Security Immersion Program. I WILL IMPROVE ON THIS TO-
MORROW, BUT I AM SENDING A DRAFT VERSION TONIGHT AS I DONT
KNOW WHEN YOU MIGHT NEED THIS. I have also faxed you some supplemental
material.
Content: We created and tailored a full day of video presentations for all employ-
ees to view, which clarified security concerns, instructed in LLNL security policies
and practices, and educated as to outside perceptions of security problems at the
weapons labs.
We followed that with a half-day designed for employees to read and discuss spe-
cific security-related materials relevant to their workplace and activities.
Lastly, we concluded with a half-day of discussion in the workplace between em-
ployees and supervisors to apply what theyve learned to their specific workplace
and activities.
We are now rolling up the output of these discussions to a Laboratory-wide com-
pilation of issues, resolutions and lessons learned.
Process: Two special meetings were held on Thursday and Friday of last week,
with all senior managers to explain and design the program.
With very few Director-approved exceptions, all work was stopped at the Labora-
tory. All employees were required to participate in the full two-days at their normal
workplace with their supervisors and managers present and participating.
Phone conversations between the Deputy Director for Operations and each senior
manager (26) or principal assistant were held Tuesday morning to assess progress
and ensure successful implementation.
Videos were rebroadcast continuously during the immersion program for make-up
and off-shift viewers. Video tapes will be provided to employees who were unable
to view them during the immersion program
Preliminary results: Preliminary feedback has been positive. Rusty Capps with his
espionage talk captivated viewers and set the stage for stimulating participation in
the remaining day and a half.
Phone calls to our hot-line indicated high employee interestmostly seeking an-
swers to questions or additional guidance to material or information.
I hope this is of interest and assistance to you. As our rollup is completed, we
will provide additional results and conclusions. This will take a few days. If you
need any additional information or help, please let me know.
BOB
LLNL SECURITY IMMERSION PROGRAM
Monday, June 21, 1999

8:30 am Director Tarter address to all Laboratory employees
Bruce discussed the importance of, and our commitment to security. He explained
the reasons for and the details of the Secretarys Security Immersion Program. He
provided a hot-line number for employees to call if they had input or questions.
Bruce then introduced the next speaker.
(This was conducted live in the Laboratory auditorium with 200 people present.
It was televised live to all Laboratory employees. With a few director-approved ex-
ceptions, all work was stopped and all employees watched the broadcast from their
workplaces.)
9:00 am to 12:00 pm The High Cost of Espionage
Presentation by Rusty Capps, former FBI agent, to all Laboratory employees.
(This hour presentation was conducted live in the auditorium to 200 employees
and broadcast live to all employees over Lab-wide television. With a few Director-
approved exceptions, all employees viewed the presentation from their workplaces.)
1:00 pm Current LLNL Practices, Foreign Visits and Assignments and Foreign Trav-
el
Presentation by Bill Dunlop, Program Leader for Proliferation Prevention and
Arms Control Program at LLNL to all Laboratory employees.
(This is a 30-minute video recorded specifically for this immersion program. It was
broadcast on Lab-wide television. With a few Director-approved exceptions, all em-
ployees viewed the video from their workplaces.)
66
1:30 pm Export Control at LLNL
Presentation by Bill Bollinger, LLNL Classification and Export Control Advisor,
to all laboratory employees.
(This is a 30-minute video recorded specifically for this immersion program. It was
broadcast on Lab-wide television. With a few Director-approved exceptions, all em-
ployees viewed the video from their workplaces.)
2:15 pm Cyber Security at LLNL
Presentation by Joe Brandt, Principal Deputy Associate Director for Compensa-
tion Directorate and Information Security Program Leader, Office of the Chief Infor-
mation Officer.
(This was a 45-minute video presentation recorded specifically for this immersion
program and broadcast via Lab-wide television to all employees. With a few Direc-
tor-approved exceptions, all employees viewed this presentation from their work-
places.)
3:15 pm Laboratory Directors Testimony
(This one and one-half hour video is a compilation of the recent testimony on secu-
rity by the three nuclear weapons Laboratory Directors. This tape was created spe-
cifically for this immersion program and televised to all employees via lab-wide tele-
vision. With a few Director-approved exceptions, all employees viewed the video
from their workplaces.)
4:45 pm Security-related TV Clips
(This one hour video was a compendium of various security-related video clips
from various recent television news programs. It was created specifically for this im-
mersion program and broadcast on Lab-wide television.)
Tuesday, June 22, 1999
8:00 am to 12:00 nAll employees gathered in their work areas and read and dis-
cussed selected materials from the following:
1) US. National Security and Military/Commercial Concerns with the Peoples Re-
public of China
2) Report of Presidents Foreign Intelligence Advisory Board (PFIAB)
3) Director of Central Intelligence George J. Tenets April 21, 1999, statement on
the implications of Chinas acquisition of U.S. nuclear weapons information
4) Report of the Secretary of Energy Advisory Board Working Group on Foreign Vis-
its and Assignments (June 8, 1999)
5) and other related materials, as appropriate
1:00 pm to 5:00 pmEmployees gathered in their workplaces and discussed with
supervisors the application of the information viewed and read, to their group activi-
ties and their workplaces. This information will then be rolled up and aggregated
at increasing levels until a full Laboratory roll-up is accomplished by the Deputy
Director for Operations. This will then be used for further Lab-wide communication
and actions concerning security. Employees and supervisors will also immediately
implement local security improvement measures identified in the two-day program.
The classes listed below were optional for those departments who believe these
topics are relevant to work-specific projects being performed by employees in their
organization:
UNCLASSIFIED Presentations for Security Immersion Program

Time Topic Speaker
08:30-09:15 a.m .................................... Document Control .................................. Maggie Lucero

09:30-10:15 a.m .................................... Export Control ........................................ Chad Twitchell
10:30-11:15 a.m .................................... Counterintelligence ................................ John Kirby
12:30-01:15 p.m .................................... Foreign interactions ............................... Melanie Florez
01:30-02:15 p.m .................................... Cyber Security ........................................ Sharon Walsh
02:30-03:15 p.m .................................... Information Management ....................... Joe Morreale
Attendance at these meetings was high both in the Schiff Auditorium and in the
video linked areas. Question and answer periods were active with questions going
beyond the scheduled time. Videotapes are being made available to all Sandia orga-
nizations for make-up sessions and for those who were double scheduled and wanted
to review the session that they missed.
67
General Observations
The staff at Sandia took the request to focus on security during these two days
with an intensity that was surprising and pleasing even to those of us who knew
that they would do a good job. Questions concerning zero tolerance and polygraphs
were related to understanding rather than rejection of the concept. A great deal of
this success is due to the planning sessions that Paul Robinson and the Laboratory
Vice presidents conducted on June 17 and 18 and the training materials prepared
by Lynn Jones and staff over the weekend. This material gave each organization
a wide range of materials to cascade the initial Monday meetings down to the staff.
SECURITY IMMERSION MEETINGS AT SANDIA NATIONAL LABORATORIESJUNE 21-22,

1999
MONDAY, JUNE 21, 1999
08:00-09:30Half of managers attended an address by Paul Robinson, labs Direc-

tor and a review of core presentation by Vice President Lynn Jones. Both speakers
emphasized the five points in Secretary Richardsons request and personalized these
points to the Laboratories.
09:30-11:30Second half of management staff attended the above presentation.
The above were video taped for use in required make-up for employees and
videolinked to our California site.
Vice Presidents met with their center and department groups for the remainder
of Monday morning. The intent of these meetings was to cascade the messages pre-
sented by Paul Robinson and Lynn Jones to each employee. The challenges pre-
sented to all Sandians are to emphasize security responsibilities and think of ways
to improve security in our operation. A quick estimate of the number of these cas-
cade meetings is 60 center-level meetings plus 1 per department (approximately 600
total meetings). Many of these were multiple session and are continuing on Monday
afternoon.
Source material was provided to every Sandian via the web site (see attached Se-
curity Immersion Program Official Use Only page). Sandians were automatically
linked to this page when they logged onto the internal web page on Monday, June
21, 1999.
TUESDAY, JUNE 22, 1999
On June 22, these cascade meetings continued plus special meetings for those
holding SCI clearances were conducted. These meetings progressed far beyond infor-
mation gathering into discussions of operation in specific organizations and how to
improve on a detailed level. Direct involvement of the Vice Presidents was clearly
a plus for the staff. This involvement ranged from teaching classes to joining classes
to answer questions.
General training sessions were held in our largest auditorium and were video
broadcast to many smaller meeting rooms. These special sessions were conducted
every hour from 8:30 a.m. to 3:30 p.m. Each session was planned for a 30-minute
presentation with a 15-minute Q&A period following.
Mr. DINGELL. Now, the Cox report stated that the labs were pen-
etrated by spies. Is that true? And he statedit said today by
spies. Is that true?
Mr. RICHARDSON. Mr. Chairman, there are three cases: in the
1970s, a neutron bomb case; the Tiger Trap case in 1984/1985 and
from 1984 to 1988, we have alleged espionage. Right now, in the
present case involving the suspect from Los Alamos there is no law
enforcement case for espionage.
Mr. DINGELL. Has anyone been punished for what happened at
Los Alamos?
Mr. RICHARDSON. I will, in 2 weeks, be issuing a report on who
has been punished, and that will be based on an inspector general
report, and individuals at Los Alamos and DOE will be punished
or disciplined.
Mr. DINGELL. Will anybody be punished?
68
Mr. DINGELL. They will? And this report will be forwarded, I

know, Mr. Secretary, to the committee?
Mr. RICHARDSON. Yes, it will.
Mr. DINGELL. Very good. So that we may be informed of the ac-
tions which will be taken.
Under your proposal, who would haveSenator, under your pro-
posal, who would administer the authority to impose civil penalties
on contractors for violation of health and safety rules which the
Congress granted DOEwhen it renewed the Price-Anderson Act
in 1987?
Mr. RUDMAN. Congressman Dingell, it would be the Secretary. I
want to make it very clear again that this is a semi, and I empha-
size the word semi, autonomous agency. There are two models in
the report. One is a NASA-type model, which is totally autono-
mous. This is an agency reporting to the Secretary with his final
control and his ability to do anything he wishes in terms of those
issues.
Those issues particularly reside in the Secretarys office and in
his other departments. He has full authority to impose whatever he
wishes on this independent, semiautonomous group.
Mr. DINGELL. Will this require renegotiation of the contract with
the contractors?
Mr. RUDMAN. We would not think so.
Mr. DINGELL. Mr. Secretary, do you know this?
Mr. RICHARDSON. There are environmental and safety and health
provisions in the contract. I dont think you need to renegotiate.
Mr. DINGELL. You dont think you have to renegotiate them so
you have full control over the behavior of the contractor, including
hiring and firing, things of that kind?
Mr. RICHARDSON. Any
Mr. DINGELL. Would you request your counsel to give us an opin-
ion on that particular matter?
The Departments management and operating (M&O) contract is a contract char-
acterized both by its purpose (i.e., the operation, maintenance, or support of Govern-
ment-owned or controlled research, development, special production or testing facili-
ties) and the special relationship it creates between the Government and the con-
tractor. See Federal Acquisition Regulation (FAR) 17.601 and 17.604, One of the in-
dicia of an M&O contract is the close relationship with the contractor and its per-
sonnel in a number of important areas, including safety, security, cost control and
site conditions. FAR 17.604 (b). Through the uniquely structured M&O contract ve-
hicle, the Department retains a large measure of control over the contractors inter-
nal management activities, generally beyond that found in other government con-
tracts. Through the M&O contract, the Department also possesses a number of rem-
edies in the event of deficient performance.
Notwithstanding the close relationship and control established under the M&O
contract, however, the M&O contract is not considered to be an employment con-
tract or personal services contract with the contractor and its employees. As a re-
sult, the Department does not have full control over all aspects of the behavior of
the contractor, including the hiring and firing of contractor employees, and it would
be necessary to renegotiate the M&O contracts should the Department (or Congress)
determine that the Secretary should possess complete control.
Using the LANL contract for illustrative purposes (Contract No. W-7405-ENG-36,
effective October 1, 1997), the following is a general description of some of the con-
tracts principal control measures and remedies available to improve performance.
The discussion below also touches upon some of the legal issues, risks and liabilities
which should be considered.
69
Personnel
The University of California is charged under the contract with providing the nec-
essary intellectual leadership and management expertise to manage, operate and
staff the Los Alamos National Laboratory. While the contractor has the overall re-
sponsibility for hiring the personnel necessary to perform the contract, the contract
addresses a number of specific personnel-related matters. For example, the selection
of Key Personnel (the Laboratory Director and Deputy Laboratory Director(s))
must be approved by the DOE Contracting Officer and cannot be removed or reas-
signed (except for disciplinary reasons) without prior consultation with the Con-
tracting Officer (clause 5.8). However, subject to the Key Personnel clause, the Uni-
versity retains the authority to terminate senior management from University em-
ployment (Appendix A, Section III (f)(4)). Additionally, in Clause 6.4, the Laboratory
Director is to be a competent full-time resident supervisory representative of the
contractor satisfactory to the Contracting Officer in charge of all work under the
contract, the contractor is made responsible for maintaining satisfactory standards
of employee competency, conduct, and integrity; for taking disciplinary action with
respect to its employees as may be necessary, and for establishing standards and
procedures, to be approved by the Contracting Officer, as are necessary to effectively
implement DOEs regulations relating to contractor employee standards of conduct,
acceptance of gratuities, and outside employment.
The contract also contains Appendix A, Personnel Costs and Related Expenses,
which is an advance understanding between the University and the Department on
allowable personnel costs and related terms and expenses. This Appendix addresses,
among other things, compensation standards, vacation time, training, travel and so
forth. Appendix A also establishes that the evaluation of the contractors perform-
ance in science and technology and operation and administration is the basis for de-
termining the contractors senior managements salary increases authorization mul-
tiplier. (Personnel Appendix A, Section III (f)(8)).
Thus, while in general the Department cannot contractually direct the Univer-
sitys hiring and firing decisions, DOE has a wide range of controls and review func-
tions in the M&O contract to assure that highly qualified individuals are employed
by the University of California in the performance of the contract and that they per-
form well in the operation of the Laboratory. As a result, DOE may exert substan-
tial influence over the selection, performance appraisal and retention of contractor
employees, particularly those in senior management positions.
The oversight controls and mechanisms discussed provide the Department with
the ability to direct, evaluate and monitor contract performance, but at the same
time to avoid creating what might be viewed as an agency or employer-employee
relationship which could arise if the Department had full control over the behavior
of the contractor, including all hiring and firing. If DOE had direct control over em-
ployees of the University of California, such control might raise legal questions by
giving the appearance that DOE was hiring a personal services contractor rather
than an independent management and operating contractor. For example, the Fed-
eral Acquisition Regulation provides that obtaining personal services by contract,
rather than direct hire, circumvents civil service laws unless Congress has specifi-
cally authorized acquisition of the services by contract (FAR 37.104). The Federal
Acquisition Regulation describes the characteristics of an employee-employer rela-
tionship as including situations where contractor personnel are subject to the rel-
atively continuous supervision and control of a Government officer or employee.
Thus, in view of the fact that the University of California is intended to have con-
tractual responsibility for managing and operating the Los Alamos National Labora-
tory and is not intended to be essentially a personal services contractor, it would
not be appropriate for DOE to exercise relatively continuous supervision and control
over individual contractor employees.
Other legal issues could also arise in the event full control over laboratory em-
ployees was obtained such that an employer-employee relationship is created and
the employees were considered to be agents of the Government. These issues include
whether the Government could be held directly liable for the tortious conduct of the
employees, whether the contractor would enjoy the Governments sovereign immu-
nity from state taxation, and whether subcontractors could assert claims directly
against the Government.
Security
Through a number of contract clauses, DOE has the authority to require the con-
tractor to fulfill extensive responsibilities in the security area. For example, the con-
tractor is required to establish appropriate controls for nuclear materials pursuant
to DOE directives (Clause 10.1), safeguard classified information and special nuclear
material and protect against sabotage and espionage, and conform to all DOE secu-
70
rity regulations and requirements (Clause 10.3), ensure that all information and
equipment generated under the contract in a potentially classified subject area is
reviewed by an appropriate classifier in accordance with classification regulations
or directives (Clause 10.4), protect certain unclassified controlled information in ac-
cordance with DOE regulations and directives (Clause 10.5), and protect DOE pro-
grams, technology, unclassified sensitive information, classified matters, etc. from
foreign intelligence threats (Clause 10.6). Among the powers and authorities DOE
has in the security area is the right to determine whether an authorization of access
to classified information or special nuclear material shall be denied to or revoked
for an individual. Possible grounds for denial or revocation of an access authoriza-
tion include failure to protect classified matter or disclosure of classified information
to a person unauthorized to receive such information (10 C.F.R. Ch. 111, section
710.8(g)(1999)).
Environment, Safety and Health
The general environment, safety and health clause in the contract provides broad
general requirements for the contractor and rights for DOE to be closely involved
in assuring that the contractor properly performs its responsibilities in the areas of
environmental, safety and health protection (Clause 6.7). For example, the con-
tractor is required to manage and perform work in accordance with a documented
Safety Management System, and the contractor must submit to the Contracting Of-
ficer documentation of its system for review and approval. The contractor must also
comply with all applicable laws, regulations, and DOE directives; and if, at any
time, the contractors action or failure to act cause substantial harm or an imminent
danger to the environment, or health and safety of employees or the public, the Con-
tracting Officer may issue an order stopping work in whole or in part.
Performance Appraisal
As a performance-based management contract, the contract provides an extensive
system for appraisal and evaluation of the contractors performance in two over-
arching areas: (a) Science and Technology, and (b) Operations and Administrative
performance (Clause 2.6; Appendix F). Detailed performance objectives, criteria and
measures are provided in areas which include, among others, safeguards and secu-
rity, and environment, safety and health, and financial management. The amount
of the program performance fee awarded to the contractor depends upon the ratings
the contractor is given in the performance areas described (Clause 5.3).
Termination
Under the Termination clause in the contract (Clause 13.2), the Contracting Offi-
cer may terminate the contract for certain specified reasons (e.g., certain illegal ac-
tivities), or whenever, for any reason, the Contracting Officer shall determine any
such termination is for the best interest of the Government. The right to terminate
a contract for convenience for the best interest of the Government has been given
great deference and generally will not be disturbed, absent a finding of bad faith
or abuse of discretion by the Government. Krygoski Construction Company, Inc. v.
United States, 94 F.3rd 1537 (Fed. Cir. 1996).
Conclusion
It is clear that DOE has broad authority to set standards and impose require-
ments over many areas of contractor performance in the operation of the Los Ala-
mos National Laboratory. And, although the M&O contract is not an employment
or personal services contract providing DOE with full control over contractor behav-
ior, including the ability to directly fire and hire all individual contractor employees,
DOE does have numerous mechanisms available, such as the right to approve a sat-
isfactory laboratory director, the right to evaluate contractor performance and thus
affect the contractors fee, and ultimately the right to terminate the contract, so that
it can effectively assure that the work is being performed in accordance with the
contracts performance standards.
Mr. DINGELL. I notice my time has expired, but one quick ques-
tion, Senator. You talked about the NRO. That is an agency that
built a building without ever telling the Congress?
Mr. RUDMAN. As a matter of fact, they built the building and told
the Congress, but everybody ignored it.
Mr. DINGELL. Is that what happened?
Mr. RUDMAN. That is exactly what happened. That is not what
the press said, but that is what happened.
71
But let me say that they have a lovely headquarters out there,
which I was here when we appropriated the money for that. I was
on the Intelligence Committee, and it is rather palatial. I think
some people up here are a bit jealous of it, but the fact is that the
work that they do is extraordinary, and I commend it to this com-
mittee to look at.
Mr. DINGELL. And they spent money, I gather, very genteelly.
Mr. RUDMAN. They spend a lot of money, but we tend to appro-
priate it for them up here.
Mr. DINGELL. Thank you, Mr. Chairman.
Mr. UPTON. The building is like the B-2 bomber, you werent sup-
posed to see it.
Mr. Shimkus.
Mr. SHIMKUS. Thank you, Mr. Chairman.
Mr. Secretary, you probably thought you were getting a break
coming to the DOE versus the U.N. It seems like the firing is a
little more intense on this end.
Senator, I am a former Army officer, and I think there is another
agency that holds people accountable for what the unit does or fails
to do, and that is the military. That is why I think we see a pro-
liferation of retired generals coming into the Federal bureaucracy
to help us rein in and keep people accountable, and I, as a veteran
and as a Reservist, I applaud that portion of our Federal Govern-
ment that still holds a line on some accountability.
I want to kind of follow up on our last line of conversation to try
to understand, Senator, the line you drew between the facilities
and functions that would be transferred to the new semi-
autonomous, independent organizations and those that would re-
main in DOE.
Your report recommends transferring three labs, Lawrence Liver-
more, Los Alamos and DN; four facilities, Kansas City, Pantex, Y-
12 and the Nevada test site.
These three labs each conduct a significant amount of non-
weapons work, so that the basic question is: What do we do with
those parts of those labs that are not doing weapons-type research?
Do we keep them there? Do we move them? Do we move the per-
sonnel? What would you do given that problem?
Mr. RUDMAN. Congressman, your question is addressed in some
detail in our written report.
Let me point out to you that the reason that we believe that even
though we gave you two alternatives, that the alternative keeping
it under the Secretary of Energys control, even though it is a semi-
autonomous agency, is for that very reason. You will note on page
50 of our report, we show the Assistant Secretary for Science and
Energy who has a direct line going into the Deputy Director of De-
fense programs. You would still have the authority going up to the
Deputy Director and all the way up, if you will, to the Under Sec-
retary, but we believe that all of that science should be kept at the
Department of Energy.
It should be done at those laboratories, and the Secretary has
enormous power under their enabling statute to do anything he
wishes to effectuate that. What we dont want to happen is to have
all of these other folks who have some lines of authority over this
weapons agency. That is where we think the trouble starts.
72
It also starts in the field operations, which we strongly say ought

to be stripped away and then put back in place to the extent that
they are needed.
Mr. SHIMKUS. Am I correct in stating that at Savannah there is
some weapons research done there also; do you know?
Mr. RUDMAN. Yes. That is production of tritium, right; I knew
that, right.
Mr. SHIMKUS. So I guess the sameI guess the same follow-up
question continues with what do we doSavannah is not really
specifically mentioned in the report, as far as I have reviewed. How
do we respond with Savannah?
Mr. RUDMAN. The Secretary can correct me on this because he
has more knowledge of it, but my understanding is that that is in
the process of a very careful long-term shutdown, if I am not mis-
taken.
Mr. RICHARDSON. Savannah deals with tritium. Savannah has
many components. We are not shutting Savannah down.
Mr. RUDMAN. Part of it is being shut down, correct?
Mr. RICHARDSON. The tritium extraction facility is going to be
built there.
Now, I guess
Mr. SHIMKUS. You see, the problem is when we are trying to
merge and have a separate entity, and I kind of tend to agree with
the Senator on the report, the question is these facilities that have
other activities that are civilian-related, how do you break them
apart? I dont know if we have thought that through.
Mr. RUDMAN. We dont break them apart. We say there are cer-
tain of these facilities which should not be a part of this agency for
nuclear stewardship. We say that the problem now is that you have
got too much in too many places.
Look, I showed this organization to the CEO of I guess it is the
ninth largest U.S. Corporation. He got hysterical looking at it. He
said it is impossible to run anything like this. He says what you
would do is you would break it into smaller units. That was after
we had done our report.
I mean, I agree with some of these comments. You bring in a
ruthless CEO, and let me tell you, it would be yes, sir, and no, sir,
march off to the right. The trouble in the body politic is we dont
operate that way, although I think the Secretary may find in the
coming 18 months of his term that he may have to get very tough
with people, because my sense is there are a lot of folks out there
who are still resisting in spite of every good effort.
Mr. SHIMKUS. I think the Secretary can take support from the
fact that there are a lot of Members of Congress who would support
activities that the Secretary does in moving aggressively.
I yield back my time.
The gentleman from Massachusetts, Mr. Markey.
Mr. MARKEY. Thank you, Mr. Chairman, very much.
Mr. Secretary, as a long-time veteran of this committee, you re-
member, I am sure, back in the 1980s, the battle days when DOE
production was everything, and there was a severe lack of environ-
mental compliance, health compliance, safety compliance, dozens of
hearings held in this committee trying to get the Department of
73
Energy to measure up on issues that were clearly of great impor-

tance to American families, American workers and the environ-
ment in our country.
At that time, the defense nuclear complex, this thing that coex-
ists with DOE, the same operators who created the massive con-
tamination of these facilities, was in charge of the environment, of
the safety, of the health function.
Now, in 1989, after countless investigations and GAO reports,
the environment, health and safety function was given to the Office
of Environmental Management. Will you oppose any legislative ef-
fort, such as the Kyl amendment in the Senate, that effectively
puts the environment, safety and health function back in the de-
fense nuclear complex, whether in the form of a semiautonomous
entity or otherwise?
Mr. RICHARDSON. Yes. Although Senator Kyl has changed his
amendment several times, I cant keep track of it, but, yes, I think
that environment, health, safety oversight should be in a separate
entity that reports directly to me, and I think the nuclear weapons
component should abide with safety and health provisions and
should not be immune from being scrutinized in these areas.
Mr. MARKEY. Senator Rudman, no one holds you in higher re-
gard than I do, and you have done an excellent job in diagnosing
the problem here. We just want to make sure that we make the
referral to the right doctor for each one of the problems. The
health, the safety, and environmental issues have always been very
troublesome in terms of the handling by the defense establishment.
Would you support the Kyl amendment?
Mr. RUDMAN. Oh, absolutely not. I told him that. In fact, they
have withdrawn it. They have essentially adopted our formulation.
And we were very careful because, you know, we heard a lot of tes-
timony from a lot of people. We looked at all of the reports from
this committee. We hadhow many reports from this committee
did we look at? Probably 30, 35 reports over the last 20 years. We
got them all from both minority and majority staff.
We do not believe that anythat the environment, the health
issues should be stripped out from where they are and put down
within this unit. We believe they ought to stay where they ought
to stay, with the Secretary. So we didnt do that, and I would not
support that kind of a change, because I know what we all went
through back during the 1980s.
Mr. MARKEY. Now, do you think that it is impossible to construct
an entity such as the Secretary is recommending, that is within the
existing structure of DOE, to solve these problems, that would sat-
isfy the concerns which your report has identified? Do you think he
just cant accomplish this under any circumstances, or are you just
kind of trying to propose the perfect, but the good could still be ac-
complished under the Secretarys formulation?
Mr. RUDMAN. It would certainly be an improvement, but let me
just make an observation, Congressman Markey.
The only essential difference, if you take the boxes of the staff
offices and say to the Secretary, what dont you think ought to be
there, and say, okay, we will move that around, we wont have an
IG, we wont have a general counsel, we will move that back up,
we will have a representative there, you get that all done, the only
74
lastingthe only difference that is left between our proposal and

his proposal is whether or not you refer to this in the statute as
the Agency for Nuclear Stewardship or the Nuclear Stewardship
Administration, directly responsible to the Secretary. That is the
only difference. There is no difference.
I have been trying to figure out now for going on 7 hoursand
I am usually not that slow, but I am pretty slow today.
Mr. MARKEY. You went to an excellent law school, Senator. I just
want to compliment you.
Mr. RUDMAN. That is right.
I cant figure out for the life of me if everybody is willing to say
to the Secretary, we will put the boxes the way you want them,
this persons is directly responsible to you and all of that, he has
some sort of a block against the word agency or administration,
and maybe you can help get him over that.
Mr. MARKEY. Mr. Secretary, is there a bridgeable gulf? Is there
another word in the thesaurus that we could look to that could
solve the problem?
The Senator says that there really is not a substantive difference
of opinion here; that it is now on the nomenclature that is dividing
you.
Mr. RICHARDSON. I think that we arehopefully we will merge
these differences.
Congressman, I also want to preserve the rights in the House of
my old committee, your oversight responsibilities, that you are now
conducting. So I want to put that on the table.
No. 2, I think it is important that we do this right because we
are going to codify it, and we dont want to create a monster that
doesnt have proper oversight by anybody else, as imperfect as it
may be.
I will repeat again, I dont think Senator Rudman and I are very
far apart. I worry about some of the drafting that is going on in
the other body that has all the right rhetoric, but if you look at the
boxes that Senator Rudman and I can agree on, that there are
some that want to, for instance, deal with safety and health sepa-
rately and not make them a part of the charter of this new entity.
I dont think it is right. I think everybody should be accountable
for safety and health and security, and I think my plan achieves
this. I think we are coming closer as the hours go by.
Mr. MARKEY. Senator Rudman and I are both alumni of Boston
College Law School, but you and I are both alumni of this com-
mittee, and I am very sensitive to your concern about our commit-
tees jurisdiction.
At the bottom of all of this is really a problem of contractors and
how we make them accountable, and if we move the people who
used to be responsible for $800 toilet seats and now put them in
charge of this, and we take the people who used to be in charge
of our secrets at the labs and move them over here to the toilet
seat area, that doesnt really do anything.
Moving around the boxes isnt going to solve this. Accountability
of contractors, no matter how we design it at the end of the day,
is really going to determine whether this is a success or not. And
I think that our committees record in identifying and highlighting
these issues over the years is unsurpassed in Congress.
75
As a matter of fact, I think you largely have had to rely upon

the reports of this committee, and I think in the same way that
while the Banking Committee might have had their scandals with
the S&L industry, we never had the counterpart in the securities
industry. The same thing can be said here, and I would just hope
that there would be some respectful attention paid to the legiti-
mate concerns raised by the Secretary.
Mr. RUDMAN. I just want to respond, if I may, Mr. Chairman, in
30 seconds.
Mr. UPTON. Go ahead.
Mr. RUDMAN. I think that it is essential that this be done care-
fully, methodically. I dont know what the Senate will do. It may
pass something in the next several days. I think this ought to be
looked at very carefully, but I just want you to understand where
I am coming from, Congressman Markey. I said it before you got
here. I am deeply concerned about what happens after Secretary
Richardson is no longer Secretary of Energy, and his top people are
now gone, and somebody comes in with different priorities. That is
why we think the semiautonomous agency or administration, struc-
tured with the right people, stands the greatest chance of main-
taining accountability.
This is all about accountability. That is what it is really about,
and I think you have said that.
Mr. MARKEY. Thank you, Senator, very much.
Mr. UPTON. The gentleman from Texas, Mr. Barton.
Mr. BARTON. Thank you, Chairman Upton.
I want to first welcome Congressman Markeys better half, Dr.
Susan Markey, in the hearing room. She was smiling broadly as
you spoke, nodding her head aggressively on occasion. So we are
glad to have her here.
I have just three questions, and I know you have got to catch a
plane, and I know Secretary Richardson has a busy schedule.
My first question is to you, Mr. Secretary. When I gave my open-
ing statement, I said that we ought to terminate the contract with
the University of California immediately, if possible. Do you see
any cultural conflicts in having an academic institution, which
tends to seek openness and dialog, in charge of a weapons complex
where a paramount concern is just the opposite, which is security
and classified information?
Mr. RICHARDSON. Congressman, I dont see a conflict. I think
whoever your contractor might be, if you have strong stipulations
on security and counterintelligence, as there should beI think
that the labs have benefited in their science, in their research, from
being associated with world-class institutions like the university. I
am talking about the science side. We have labs associated with
MIT, with Princeton, with the University of Chicago. That is good
for science. That is good for us.
We have some relationships with your universities that are good
for the Department of Energy.
Mr. BARTON. Why hasnt the University of California then, if it
is good for the weapons complex, why havent they aggressively
acted on the recommendations that you have made and other Sec-
retaries before you have made? Why does it take a congressional
oversight hearing and a national scandal to get their attention?
76
I could point out that when Chairman Dingell was chairman of

the full committee, his oversight subcommittee uncovered a num-
ber of scandals in the contract that the University of California
was then administering. So how many scandals and how long does
it take, Mr. Secretary?
Mr. RICHARDSON. Well, there shouldnt be any more. There
shouldnt be any more.
Mr. BARTON. Well, I think we agree on that.
Mr. RICHARDSON. There should be statutory language to prevent
ingrained problems. We are moving in that direction, but I am not
going to blame the University of California for all the security
lapses at the lab.
Mr. BARTON. Well, they are the contractor.
Mr. RICHARDSON. Well, it is
Mr. BARTON. You either blame the contractor, or you blame peo-
ple above them in your chain of command. There has to be account-
ability.
Mr. RICHARDSON. I am blaming the people above them. I am
blaming the Department of Energy. I am blaming past White
Houses. We could have a collective responsibility. You cant just
blame the contractor. We change the culture of the lab employees.
Mr. BARTON. Well, I think you can hold them accountable.
Mr. RICHARDSON. I am blaming the Congress, too. You know, we
shouldnt havemy staff is yelling no.
Mr. BARTON. No, that is okay. I wont disassociate myself with
that.
Mr. RICHARDSON. We briefed a lot of committees about these
problems, and there were times when my counterintelligence chief
didnt get the funding that he requested from the Congress.
Mr. BARTON. I have got two more questions. I know that you can
filibuster with the best in the other body when you want to.
Senator Rudmans report has a part of it in the section entitled
Trouble Ahead, where it talks about that foreign nationals were
able to have remote dial-up access to unclassified networks without
any monitoring by the lab. Is that true, yes or no?
Mr. RICHARDSON. There will be monitoring soon.
Mr. BARTON. No, it is not true. So Senator Rudmans report is
wrong? Well, we will come back to that.
Mr. RICHARDSON. No, Senator Rudman has got a very good,
strong report.
Mr. BARTON. Okay. It goes on to say that the labs have begun
to monitor outgoing e-mails for classified materials, that you per-
sonally ordered that in April, but that one lab took the minimal ac-
tion necessary. It began monitoring e-mails but did not monitor the
files attached to the e-mails. What is your reaction to that?
Does that indicate to you that they are taking seriously these
concerns?
Mr. RICHARDSON. Well, no, no, no. Every lab has been strong,
some stronger than others. There are some that should have been
stronger. There were some technology problems related to
cybersecurity. This is why I ordered this computer stand-down.
Mr. BARTON. My high school junior daughter knows that if you
are supposed to monitor an e-mail, you also have to monitor the
file attached to it, Mr. Secretary. That doesnt take a rocket sci-
77
entist at a weapons laboratory. I mean, that is kind of honoring the

spirit of your direct request.
Mr. RICHARDSON. We are doing that.
Mr. BARTON. But not doing what is totally required.
Mr. RICHARDSON. What we are doing, we are monitoring e-mail.
There are such explosive changes in technology. This is why in
cybersecurity you need constant testing. That is what is happening
today in the stand-down.
Mr. BARTON. So can I depend upon you today directly to go back
and send out another directive that in addition to monitoring the
e-mails, they also monitor the files attached to the e-mails?
Mr. RICHARDSON. They are working on that.
Mr. BARTON. Do I need to give you a definition of what a file at-
tachment is? I mean, how many levels down do we have to go be-
fore you begin to take this seriously?
Mr. RICHARDSON. You know, Congressman, I amthis is what I
mean. I marvel at the sources of information that you have that
I apparently dont have.
Mr. BARTON. Our source is sitting right next to you.
Mr. RICHARDSON. Well, you havein the last second, 2 minutes,
you have come up with two claims that I am unaware of.
Mr. BARTON. I am not even the Secretary of Energy. I am just
a lowly midranking Congressman trying to just bask in the re-
flected glory of your stewardship at the Department of Energy.
I have got one final question for Senator Rudman.
When Secretary Richardson ordered the computer shutdowns at
the three laboratories back in April, the Department stated that
the computers would not be allowed back on until each lab under-
took certain security upgrades to prevent the downloading there,
we have that word again, or transfer of classified files and to scan
its unclassified systems and outgoing e-mails for classified data.
Mr. SecretaryI mean, former Senator, what did your panel find
with respect to these initiatives? Were the computers allowed back
on despite the failure to achieve these upgrades? And if so, why so?
Mr. RUDMAN. We started drafting this report in early May. We
had a chance to observe much of what went on. We believe the
stand-down was a good idea. We think something was achieved by
it. We do not have the level of confidence of the Secretary or some
of his people that we are quite where we want to be. As a matter
of fact, in fairness, it is not just DOE. It is the entire government.
Some of the firewalls that people think that have existed at DOE
and other places dont exist.
The PFIAB does not talk about its work publicly, but let me sim-
ply say parenthetically we do a great deal of work and have been
doing it, obviously, in the area of the Intelligence Community and
cybersecurity. So I think we probably know a little bit more about
that than most folks out there.
I have no high level of confidence, but I am not even sure the
Secretary has a high level of confidence. I think they have done
what current technology will give them, but there is a lot more to
be done.
Mr. BARTON. Is there a protocol, now that your report is public,
that prevents your staff that helped in the advisory board to com-
78
pile this report from talking to the Secretary of Energys designee

on some of these issues? Is that allowed or not allowed?
Mr. RUDMAN. It is allowed. The PFIAB is an independent group,
but nonetheless part of the Executive Office of the President, bipar-
tisan. It can work with any agency that has a component of intel-
ligence or counterintelligence. So certainly we dont have a problem
talking about it.
Mr. BARTON. The Secretary seems perplexed that sources of our
information are not available to he and his staff, so I would encour-
age you to provide them what you have provided the committee.
Mr. RUDMAN. Well, we are not the original source, but we will
be happy to direct him to the best source in the government for
that information.
Mr. BARTON. Mr. Chairman, in closing, if we take legislative ac-
tion on this issue, and I hope we do, it will come before my sub-
committee, and I pledge to the Secretary and to the Senator that
we will work together to try to come up with something that every-
one can support.
I want to tell my good friend, the Secretary, that I want to be
more proactive on this and think outside the box a lot more than
I gather that you do based on your testimony today, but I will work
with you on it.
Mr. UPTON. Thank you, Mr. Barton.
Again, to my two friends, personal and certainly professional, we
appreciate your fine work and your willingness to spend a number
of hours with us this afternoon. We look forward to working with
you in the days ahead. Thanks very much.
[Whereupon, at 4 p.m., the committee was adjourned.]
[Additional material submitted for the record follows:]
RESPONSES FOR THE RECORD OF HON. BILL RICHARDSON, SECRETARY OF ENERGY
QUESTIONS FROM THE HOUSE COMMERCE COMMITTEE
Question 2. Do you believe that giving the labs more independence will change
their culture or improve security? What do you recommend as the most effective
step you can take to change the laboratory culture, from the lab director down
through the ranks, so well described in the Rudman report concerning the signifi-
cance of security and safety issues?
Answer 2. Improving security at the labs depends on factors including Head-
quarters and laboratory management commitment; employee training; the recogni-
tion by each employee that security is their individual responsibility; and financial
incentives for the laboratories to strive for the highest level of performance in safe-
guards and security. Each of these important areas is being addressed.
Defense Programs has initiated measures that will institutionalize each of these
factors. Field managers have been directed by Defense Programs Management to
provide immediate, detailed information to headquarters for management assess-
ment of all security incidents as well as their corrective actions. Defense Programs
is currently tracking to closure all deficiencies so that sites will attain a satisfactory
rating by the end of calendar year 1999. A laboratory stand-down was conducted
in April 1999, and a 9-point INFOSEC Action Plan for all classified computer pro-
fessionals and administrative users was instituted. A security Immersion Program
for all federal and contractor field and headquarters personnel was conducted in
order to provide training in Information Security policies and procedures and to in-
sure that each individual understands that security is his/her responsibility. Finally,
Defense Programs is working to assure a more consistent process for determining
safeguards and security Performance Objectives, Criteria and Measurements
(POCMs) for the laboratories in FY 2000. The new performance evaluation criteria
will be based on safeguards and security results from oversight reviews. Award fees
79
will be determined in conformity with the laboratories performance and their ac-
countability for individual protection programs.
The revised POCMs will provide an incentive for the laboratories to achieve a sat-
isfactory rating in their programs. Defense Programs management accountability
and sustained attention to its safeguards and security programs will promote a cul-
tural change and superior performance in these areas.
QUESTIONS FROM CONGRESSMAN DINGELL
Question 3. Who do you think should enforce environmental, health and safety re-
quirements at the DOE weapons facilities? Under a quasi-independent agency as
proposed, how would these requirements be imposed?
Answer 3. I believe the soundest approach to enforcement of environment, health
and safety requirements in the DOE defense complex is one in which line manage-
ment bears responsibility for safe and compliant operations, with a robust inde-
pendent oversight and enforcement regime outside the operational chain of com-
mand. This ensures that all the Departments expertise can help assure safe and
compliant operations. It is well to remember that the DOE defense complex must
conduct its operations using potentially extremely hazardous materials in esoteric
processes, and therefore assuring worker and public health and safety is an objec-
tive whose importance cannot be overstated.
Under the recently-adopted National Nuclear Security Administration Act the Ad-
ministrator is expressly charged by statute with responsibility for environment,
safety and health regarding operation of the Departments defense complex. Other
provisions of the legislation, in particular its unusual limitations on the Secretarys
direct management and delegation authorities, likely will compel changes in the
independent environment, safety and health enforcement regime within the Depart-
ment with respect to the defense complex. Specifically, for example, the legislation
would effectively terminate the emergency shutdown authority that since 1988 has
been delegated to the Assistant Secretary for Environment, Safety and Health. We
anticipate seeking clarifying legislation bearing on this question, and in any event
will provide the Departments implementation plan in the report the statute re-
quires the Secretary to submit by January 1, 2000.
Question 4: The Rudman panel is very taken by the operations of the National
Reconnaissance Office (NRO) which is responsible for the awarding and managing
the contracts that provide the nations surveillance satellites. The report indicated
that DOE should be modeled after the NRO. Is this an appropriate agency to com-
pare to the Department of Energy. Why or why not?
Answer 4: The NROs charter, which is a Department of Defense Directive rather
than a statute, makes clear that the entire NRO is under the direction and super-
vision of the Secretary of Defense, and is headed by a Director who manages the
NRO in accordance with policy guidance and decisions of the Secretary of Defense.
DoD Dir. 5105.23, 1&2. The Secretary of Defense, in turn, may exercise any of
his powers of supervision of the NRO through, or with the aid of such persons in,
or organizations of, the Department of Defense as he may designate. 10 U.S.C.
113(d). Thus the Secretary of Defense retains both direct supervisory authority over
the NRO itself and the ability to delegate that authority to any person or entity
within the entire Department of Defense.
These Secretarial management authorities over the NRO were rejected in the leg-
islation establishing the National Nuclear Security Administration. Instead that leg-
islation enacted firewalls immunizing NNSA personnel from any outside super-
vision, including by the Secretary himself, and limited the Secretarys ability to del-
egate his sole supervisory authorityover just the head of the NNSAonly to the
Deputy Secretary. These are major deficiencies of the legislation, which conflicted
in this respect with the models of semi-autonomous agencies cited in the Rudman
Report recommendations.
Question 5: Does the NRO have any non-military scientific missions? Is it ex-
pected to go out and find unclassified work in the private sector to keep its contrac-
tors busy?
Answer 5: While it is possible that the NRO has non-defense scientific missions,
the Department is not aware of any such missions and there is no evidence of any
such missions in the publicly available documents on the NRO.
The Department of Defense Directive which created the NRO describes the NROs
Organization and Responsibility as follows: The Director [of the NRO] will be re-
sponsible for the consolidation of all Department of Defense satellite air vehicle
overflight projects for intelligence, geodesy and mapping photography [deleted mate-
rial] into a single program, defined as the [deleted material] National Reconnais-
sance Program . . . DoD Dir. 5105.23, 2 (March 27, 1964). The NROs mission
80
statement as it appears on the NROs official website reads as follows: The mission
of the National Reconnaissance Office is to enable U.S. global information superi-
ority, during peace through war [sic]. The NRO is responsible for the unique and
innovative technology, large-scale systems engineering, development and acquisi-
tion, and operation of space reconnaissance systems and related intelligence activi-
ties needed to support global information superiority.
The Department similarly has no direct familiarity with the NROs policies and
procedures governing its contractors and their work.
The Department will have to defer to the NRO regarding additional information
on both of these matters.
Question 6. The complicated organization chart in the Rudman report does not de-
scribe your recent changes, but is there more to be done/ For example, should the
field offices be eliminated or significantly reduced?
Answer: The complicated organization chart to which you refer was drawn to
make the point that the lines of authority and accountability within the Department
were unclear. While the chart was somewhat overdrawn, I agree with the point.
That is why I chartered a Management Review of the roles and responsibilities and
lines of authority and accountability at Headquarters and the field. In recent testi-
mony before the Congress on these issues, I presented the attached chart showing
how we had clarified the Departments program responsibilities.
We are continuing to implement the changes to the Departmental structure that
I proposed in April as a result of my Management Review. These changes will elimi-
nate multiple reporting channels and improve lines of communication, direction and
accountability.
Regarding the field offices, I continue to believe they play an indispensable role.
As you know, our laboratories and production sites are primarily government
owned, contractor operated, facilities. These sites need a Federal presence nearby
for contractor oversight, liaison with Headquarters and the continuing task of rep-
resenting the Federal government to the surrounding communities, local political in-
stitutions, and regulators. We have reduced the Departments Federal field staff by
an average of 25% since 1996 and we continue to look for more efficient ways to
do our work in the field.
81
82
Question 7. Would you oppose a requirement that all lab management contracts
which have not been rebid in the last five years should be rebid at their next expira-
tion? Why or why not?
Answer 7. Consistent with the Competition in Contracting Act of 1984 (CICA),
DOE policy establishes competition as the norm for its contracts for the manage-
ment and operation of its major sites and facilities, including its laboratory manage-
ment contracts. DOEs competition policy also preserves the benefits of long term
relationships by permitting contract terms for up to 10 years for these contracts. I
support that policy and believe that there are significant benefits to competition.
During this Administration, DOE has competed numerous site and facility contracts
(both laboratory and non-laboratory), e.g., Brookhaven National Laboratory, Idaho
National Engineering and Environmental Laboratory, Bettis Atomic Power Labora-
tory, National Renewable Energy Laboratory, Hanford Site, Rocky Flats Environ-
mental Technology Site, Savannah River Plant, the Oak Ridge environmental pro-
gram, and Mound Site. Notwithstanding this impressive track record of competition,
I would oppose a statutory requirement to compete laboratory management con-
tracts which have not been competed in the last five years. Such a requirement
would be contrary to established law and regulatory policy, could adversely affect
the accomplishment of critical Departmental missions, and would ignore cir-
cumstances which would rationally support a noncompetitive action.
Consistent with current law and regulations applicable to other Federal agencies,
DOEs competition policy provides that contracts for the management and operation
of DOE sites and facilities, including laboratories, will be competed, unless a non-
competitive procurement is justified in accordance with criteria contained in CICA.
CICA recognizes the need for contractual latitude in addressing the needs of the
United States Government by providing seven specific exceptions to the requirement
to compete, e.g. only one responsible source; unusual and compelling urgency; indus-
trial mobilization or essential engineering, development, or research capability pro-
vided by educational or nonprofit institutions, or Federally Funded Research and
Development Centers (FFRDCs); and national security. Moreover, the Federal Ac-
quisition Regulation (FAR), under Part 35.017, encourages long-term relationships
between the Government and FFRDCs in order to provide the continuity that will
attract high-quality personnel to the FFRDC, permit special long-term research or
development needs to be met, and accomplish tasks that are integral to the mission
and operation of the sponsoring agency. Flexibility under special circumstances is
an important management tool in order for DOE to meet mission needs and retain
excellent R&D laboratory contractors.
The ability to engage in prudent decision-making provided by CICA and the rec-
ognition of the value of special long term relationships found in the FAR are critical
to the successful conduct of DOE missions. DOE missions are broad and varied, crit-
ical to the national security of the United States, and the national laboratories are
an important cornerstone in the accomplishment of these missions. However, this
does not mean that DOE mechanically applies the exceptions allowed by CICA or
the flexibility of the FAR. DOEs exercise of the discretion authorized by statute and
regulation is, in fact, more rigorous than what is found in most, if not all, other Fed-
eral agencies. Any decision to extend rather than compete a management and oper-
ating contract requires an extensive analysis of the basis for non-competition, con-
sensus of DOEs senior management, Secretarial authorization, and Congressional
notification. Pursuant to the Energy and Water Appropriations Act of 1999, none
of the funds appropriated by that Act may be used to award a management and
operating contract unless such contract is awarded using competitive procedures or
the Secretary of Energy grants a waiver to the requirement. Also under this Act,
the Secretary must notify Congress of any waiver at least 60 days before contract
award. Furthermore, DOE is the only agency that routinely reviews its FFRDC lab-
oratory contracts for competition even though one CICA exception expressly covers
FFRDCs. Over the last five years DOE competed, or is in the process of competing,
six FFRDCs. No other agency has demonstrated such a track record.
QUESTIONS FROM THE HOUSE COMMERCE COMMITTEE
Question 8. The security function at DOE has always included the nuclear mate-
rials accountability responsibility. There are large amounts of nuclear materials
stored at sites, such as Rocky Flats, that would not be part of the new agency as
proposed by Senator Rudman and others. Do you believe that this is a workable and
efficient arrangement.,
Answer 8. The Department is committed to assure that nuclear material account-
ability responsibilities at DOE sites both within and outside the purview of the new
83
administration will be coordinated in order to ensure proper accountability for these
materials.
The Department has convened a Task Force to develop a plan for implementation
of the National Nuclear Security Administration. Details of the plan will be included
in the report required by the National Defense Authorization Act for Fiscal Year
2000.
Question 9. Under the Rudman proposal, who would be responsible for security
at the other DOE weapons sites and its other facilities? Who would be responsible
at Savannah River, Hanford, and Oak Ridge? Would there be a parallel structure
for the non-weapons and weapons sites?
Answer 9. The Department has convened a Task Force to develop an implementa-
tion plan for the National Nuclear Security Administration. Details of the plan will
be included in the report required by the National Defense Authorization Act for
Fiscal Year 2000.
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House Hearing, 106TH Congress - The Rudman Report: Science at Its Best, Security at Its Worst

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House Hearing, 106TH Congress - The Rudman Report: Science at Its Best, Security at Its Worst

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THE RUDMAN REPORT: SCIENCE AT ITS BEST,

SECURITY AT ITS WORST

JUNE 22, 1999

Serial No. 10657

Printed for the use of the Committee on Commerce

U.S. GOVERNMENT PRINTING OFFICE

TUESDAY, JUNE 22, 1999

pattern on security matters is all too clear: scandal or incident, fol-

was scheduled to testify before our Oversight Subcommittee in

gance by giving it a semiautonomous status in the Department of

PREPARED STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN CONGRESS FROM

PREPARED STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS

PREPARED STATEMENT OF HON. GREG GANSKE, A REPRESENTATIVE IN CONGRESS

PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS

PREPARED STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN

PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM

STATEMENT OF HON. BILL RICHARDSON, SECRETARY OF

countability, unclear roles and responsibilities, a lack of attention

A bureaucratic Berlin Wall between the weapons labs and the

brings to this job his experience as the Commander in Chief of

this back because I think it is important to have this independent

There is an old saying among farmers from New Hampshire, and

tionships that exist between field offices, headquarters and contrac-

ficials noted that 37 Chinese intelligence officers had visited or

that it is properly administered, that it is handled, that it is not

saturated with a cynicism and disregard for authority. Never before

Mr. RICHARDSON. Congressman, I will make that decision after

looked at environment, have not looked at security, have not looked

that he kept. I have no confidence that that will continue once he

good reorganization that the Senator has proposed. And what I am

I just came in late, and, frankly, I am just trying to get up to speed

Mr. BARRETT. Would your recommendations about a new over-

the Secretary is probably saying they put a lot of things in place

perts in cyberpenetration. These firewalls are penetrated all the

Mr. BURR. Let me read a statement that he made on May 30 to

California. The University of California has just undertaken a re-

Mr. GREENWOOD. Okay. The Rudman report also mentioned that

Mr. STEARNS. I thank the chairman.

Let me answer your question from my report. If you look at page

We are at the time undertaking a rulemaking process, and I

Mr. KLINK. So how would you be made awarewithout giving up

laboratories and facilities like Oak Ridge or Savannah River? Is

Mr. KLINK. If there is a different interpretation between what

Mr. MARKEY. Mr. Chairman, I apologize. I was just sitting over

Mr. RICHARDSON. Yes. I have to consult with the lab director,

SUMMARY OF SECURITY STANDDOWN ACTIVITIES

LLNL SECURITY IMMERSION PROGRAM

Monday, June 21, 1999

UNCLASSIFIED Presentations for Security Immersion Program

08:30-09:15 a.m .................................... Document Control .................................. Maggie Lucero

SECURITY IMMERSION MEETINGS AT SANDIA NATIONAL LABORATORIESJUNE 21-22,

08:00-09:30Half of managers attended an address by Paul Robinson, labs Direc-

Mr. DINGELL. They will? And this report will be forwarded, I

It also starts in the field operations, which we strongly say ought

Energy to measure up on issues that were clearly of great impor-

lastingthe only difference that is left between our proposal and

As a matter of fact, I think you largely have had to rely upon

I could point out that when Chairman Dingell was chairman of

entist at a weapons laboratory. I mean, that is kind of honoring the

pile this report from talking to the Secretary of Energys designee

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